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Frederick Von Hayek

Philip Pilkington: The Origins of Neoliberalism, Part I – Hayek’s Delusion

By Philip Pilkington, a writer and research assistant at Kingston University in London. You can follow him on Twitter @pilkingtonphil

It is not only by dint of lying to others, but also of lying to ourselves, that we cease to notice that we are lying.

– Marcel Proust

Friedrich Hayek was an unusual character. Although well known to be a libertarian political philosopher, he is also commonly associated with being an economist. And it’s certainly true that at one time Hayek’s focus was solely on economics. In the 1920s Hayek was still within the fold of pure economics, publishing papers and works that were taken seriously by the discipline. However, by the 1930s Hayek’s theories had started to come apart at the seams. Exchanges between Hayek and John Maynard Keynes and Piero Sraffa show Hayek as confused and even somewhat desperate. It was around this time that Hayek discontinued making any substantial contributions to economics. Not coincidentally this overlapped with the time when most economies, mired as in Great Depression, demonstrated that Hayek’s theories were at best impractical, at worst a complete perversion of facts.

So, Hayek turned instead to constructing political philosophies and honing a metaphysics rather than engaging in any substantial way with the new economics that was emerging. When pure logic and empirical reality ceased to support Hayek’s emotionally charged ideology he turned, to the more malleable sphere of meaning and metaphysics. He became concerned with watery terms like “freedom” and “liberty”, which he then set out to impregnate with a meaning that would support his dreams. The most famous result of this period of conversion, which resembled less St. Paul on the road to Damascus and more so an alcoholic who had hit rock bottom, was Hayek’s 1944 work The Road to Serfdom. In a very real way it was this book that marked the close of Hayek’s career as a serious economic thinker and set him on the path of the political propagandist, agitator and organiser.

The over-arching argument of the book is well-known and need not be repeated too extensively here. Hayek thought that all totalitarianisms had their origins in forms of economic planning. Economic planning was the cause of totalitarianism for Hayek, rather than the being just a feature of it. Underneath it all this was a rather crude argument. One may as well make the observation that totalitarianism was often accompanied by arms build-up, therefore arms build-ups “cause” totalitarianism. But Hayek pushed it and most probably believed it anyway, for reasons that we shall soon see.

The implicit argument here was that, Britain for example, which had begun to increasingly plan its economy during the war, was on a slippery slope that would end in totalitarianism. It must be understood that Hayek’s argument had no factual basis. Only a polemicist could argue that the two totalitarianisms that existed in this period – namely, Hitler’s Germany and Stalin’s Soviet Union – had formed because a naïve democratic government had engaged in some economic planning that then got out of hand and resulted in tyranny. But Hayek’s motivations probably lay somewhat deeper – probably so deep that he himself could not properly recognise them.

The Rise of the Third Reich: Hayek’s Historical Repression

To understand Hayek’s “reasoning” a bit better we should consider the political situation that he refused to return to after Austria’s annexation by Hitler in 1938. The broad reasons for Hitler’s rise to power are beyond dispute among serious historians today. The sweeping picture of Germany in this era is that she was not only humiliated after the First World War but was also subject to vicious reparations payments – payments which ultimately set off a hyperinflation in the country. The average German knew that the national humiliation and the economic turmoil were intimately connected and so they became increasingly bitter about the Treaty of Versailles which they thought, quite rightly, had subjected the country to both economic and political bondage. It was into this vacuum that Hitler and his cronies stepped and began, in the early to mid-1920s, to accumulate political support.

However, after the hyperinflation came to an end and thanks to loans from the United States, the reparations troubles eased and the German economy began to return to moderate growth. Hitler’s popularity fell enormously in this period. But the 1929 stock market crash soon came and the loans from the United States promptly dried up. Unemployment soared in Germany and the government, like so many others across the world, engaged in severe austerity in order to attempt to balance the budget. They believed that this would return the country to economic prosperity.

In retrospect it is quite obvious that Hitler’s immediate rise to power was due to the economic downturn and the government’s deflationary policy response. In 1930 the Nazis had become the second largest party, obtaining 18.3% of the votes. When compared with the 2.8% of the vote they received in 1928 during an era of high employment and an economically optimistic outlook it quickly becomes obvious what the underlying forces driving Hitler’s election actually were.

That the economic policies the Weimar government had engaged in had led to the election of Hitler was and is obvious to any unbiased observer. But there were many who actively repressed this fact. The liberals that had supported the government’s austerity measures no doubt felt some burden, whether unconscious or otherwise, of guilt. This is best illustrated by an anecdote that the American economist John Kenneth Galbraith relates regarding the Chancellor who presided over the austerity, Heinrich Brüning, which he published in his book Money: Whence It Came, Where It Went:

In the 30s, Brüning joined the Harvard faculty as Professor of Government. At a welcoming seminar one evening I asked him if his Draconian measures at a time of general deflation had not advanced the cause of Adolf Hitler. He said that they had not. When, unwisely, I pressed the point, he asked me if I disputed the word of the former Chancellor of the German Reich.

This was then, rather unsurprisingly, a touchy subject for Brüning which he preferred to evade. After all, the facts were simply not on his side and there was no way he could rationally argue to the contrary. Likewise too for those liberals like Hayek who firmly believed that the austerity measures were the only road to salvation. Mark Ames at the eXiledonline sums up rather nicely the reaction this provoked in Hayek and the other Austrian school libertarians:

Von Hayek and his fellow Austrian aristocrats who were forced to flee from the fruits of their economic programs, did a complete revision of history and retold that same story as if the very opposite of reality had happened. Once they were safely in England and America, sponsored and funded by oligarch grants, hacks like von Mises and von Hayek started pushing a revisionist history of the collapse of Weimar Germany blaming not their austerity measures, but rather big-spending liberals who were allegedly in charge of Germany’s last government. Somehow, von Hayek looked at Chancellor Bruning’s policies of massive budget cuts combined with pegging the currency to the gold standard, the policies that led to Weimar Germany’s collapse, policies that became the cornerstone of Hayek’s cult—and decided that Bruning hadn’t existed.

An Existential Choice

It is not hard to discern whether Hayek was lying or simply deluded. He was not lying – at least not consciously. For the rest of his life he was driven by a genuine belief in the idea, put forward in The Road to Serfdom, that economic planning was what had led to totalitarianism in Europe. It was not hard to discern if Hayek was lying simply by looking at the zeal with which he pursued the crusade against planning. This was not the cynical enthusiasm of a charlatan, but instead the forward impetus of a man who, as if riding a bicycle, would come crashing down emotionally if lost his momentum.

Hayek’s entire ideology and career had begun to come apart in the 1930s. His theories were shown to be inconsistent in the academic journals of the time and the practical implications of those theories had shown themselves to be both discredited and dangerous. A man in such a position only has two choices: he can either completely re-evaluate his ideas which, if they were held with unshakeable conviction and constituted a core component of his emotional make-up, as seems to have been the case with Hayek, would have likely resulted in a mental collapse; or, alternatively, he can engage in a massive repression, shut out reality and construct around himself a fantasy world.

Hayek opted for the latter. So too did all of what was to become the neo-Austrian school which soon developed into a sealed hermetic cult of True Believers who reinforced each other’s unsubstantiated ideas and defended each other from the threatening world outside the circle. But this cult was largely fringe. Although it did command some respect among neoliberals in the Thatcher and Reagan administrations, it was the respect accorded to the eccentric rather than that accorded to the practical man. Lip service was paid to the doctrines of Hayek and the Austrians, but their extremist and impractical economic policy implications were sterilised and kept out of immediate contact with the levers of power. Milton Friedman’s more pragmatic doctrines of monetarism were preferred so far as economic policies went.

But we should not fool ourselves. Hayek’s delusion did indeed have profound effects on history. Indeed, as we shall see, it was even directly responsible for Friedman’s rise. For Hayek, in his crusade against what he thought the germ from which totalitarianism spread, became a tireless worker and organiser. With the ingenuity of a Leninist, Hayek formed around him a host of like-minded thinkers and politicians. Backed by the funding of right-wing millionaires, Hayek constructed a network of people who he initiated into his delusion and convinced that every manifestation of collective intervention into the free market was just one more stepping stone on the road to serfdom.

Likewise in the popular mind – for Hayek did effectively become a political propagandist rather than a respected intellectual in the 1940s – Hayek’s delusion, with all its emotional overtones, spread quite effectively. Today whenever we encounter an anxiety-ridden Tea Partier or a fearful and paranoid internet Austrian, it is Hayek’s delusion that we are hearing echoed through the chambers of history, albeit in slightly vulgarised form. It is the fear, distrust and paranoia which Hayek’s portrait of a free society descending into barbarism evokes that captures the minds of those it touches. That it is completely deluded and ignorant of history only makes it more effective, like all propaganda, in its role as propaganda. The bigger the lie, the more emotional investment it requires to believe in and so the more it captures the uncritical and the emotionally weak.

The inner sanctum from which Hayek’s delusion emanated was called the Mont Pelerin Society. In the next piece in this series we will turn to how Hayek’s delusion was diluted by those in the Mont Pelerin Society to fit with the American political system; this is what we might call the American version of neoliberalism. While in the final piece we will consider how Hayek’s delusion was gradually converted into the European form of neoliberalism when it was confronted with the problem of trade unions. As we shall see there is much overlap between these two forms of neoliberalism and each borrows from the other – this, of course, being the reason why they are not generally distinguished between – but most importantly, they share a common root in the wall that Hayek erected in his mind in the 1930s and 1940s to block out a world that he himself had played a part in creating.

How a ruthless network of super-rich ideologues killed choice and destroyed people’s faith in politics

Extracted from: Neoliberalism the deep story that lies beneath Donald Trump’s triumph Opinion , by George Monbiot; The Guardian, 14 November 2016

The events that led to Donald Trump’s election started in England in 1975. At a meeting a few months after Margaret Thatcher became leader of the Conservative party, one of her colleagues, or so the story goes, was explaining what he saw as the core beliefs of conservatism. She snapped open her handbag, pulled out a dog-eared book, and slammed it on the table. “This is what we believe,” she said. A political revolution that would sweep the world had begun.

The book was The Constitution of Liberty by Frederick Hayek. Its publication, in 1960, marked the transition from an honest, if extreme, philosophy to an outright racket. The philosophy was called neoliberalism. It saw competition as the defining characteristic of human relations. The market would discover a natural hierarchy of winners and losers, creating a more efficient system than could ever be devised through planning or by design. Anything that impeded this process, such as significant tax, regulation, trade union activity or state provision, was counter-productive. Unrestricted entrepreneurs would create the wealth that would trickle down to everyone.

This, at any rate, is how it was originally conceived. But by the time Hayek came to write The Constitution of Liberty, the network of lobbyists and thinkers he had founded was being lavishly funded by multimillionaires who saw the doctrine as a means of defending themselves against democracy. Not every aspect of the neoliberal programme advanced their interests. Hayek, it seems, set out to close the gap.

He begins the book by advancing the narrowest possible conception of liberty: an absence of coercion. He rejects such notions as political freedom, universal rights, human equality and the distribution of wealth, all of which, by restricting the behaviour of the wealthy and powerful, intrude on the absolute freedom from coercion he demands.

Democracy, by contrast, “is not an ultimate or absolute value”. In fact, liberty depends on preventing the majority from exercising choice over the direction that politics and society might take.

He justifies this position by creating a heroic narrative of extreme wealth. He conflates the economic elite, spending their money in new ways, with philosophical and scientific pioneers. Just as the political philosopher should be free to think the unthinkable, so the very rich should be free to do the undoable, without constraint by public interest or public opinion.

The ultra rich [in Hayek opinion] are “scouts”, “experimenting with new styles of living”, who blaze the trails that the rest of society will follow. The progress of society depends on the liberty of these “independents” to gain as much money as they want and spend it how they wish. All that is good and useful, therefore, arises from inequality. There should be no connection between merit and reward, no distinction made between earned and unearned income, and no limit to the rents they can charge.

Inherited wealth is more socially useful than earned wealth: “the idle rich”, who don’t have to work for their money, can devote themselves to influencing “fields of thought and opinion, of tastes and beliefs”. Even when they seem to be spending money on nothing but “aimless display”, they are in fact acting as society’s vanguard.

Hayek softened his opposition to monopolies and hardened his opposition to trade unions. He lambasted progressive taxation and attempts by the state to raise the general welfare of citizens. He insisted that there is “an overwhelming case against a free health service for all” and dismissed the conservation of natural resources. It should come as no surprise to those who follow such matters that he was awarded the Nobel prize for economics.

By the time Thatcher slammed his book on the table, a lively network of think tanks, lobbyists and academics promoting Hayek’s doctrines had been established on both sides of the Atlantic, abundantly financed by some of the world’s richest people and businesses, including DuPont, General Electric, the Coors brewing company, Charles Koch, Richard Mellon Scaife, Lawrence Fertig, the William Volker Fund and the Earhart Foundation. Using psychology and linguistics to brilliant effect, the thinkers these people sponsored found the words and arguments required to turn Hayek’s anthem to the elite into a plausible political programme.

Thatcherism and Reaganism were not ideologies in their own right: they were just two faces of neoliberalism. Their massive tax cuts for the rich, crushing of trade unions, reduction in public housing, deregulation, privatisation, outsourcing and competition in public services were all proposed by Hayek and his disciples. But the real triumph of this network was not its capture of the right, but its colonisation of parties that once stood for everything Hayek detested.

Bill Clinton and Tony Blair did not possess a narrative of their own. Rather than develop a new political story, they thought it was sufficient to triangulate. In other words, they extracted a few elements of what their parties had once believed, mixed them with elements of what their opponents believed, and developed from this unlikely combination a “third way”.

It was inevitable that the blazing, insurrectionary confidence of neoliberalism would exert a stronger gravitational pull than the dying star of social democracy. Hayek’s triumph could be witnessed everywhere from Blair’s expansion of the private finance initiative to Clinton’s repeal of the Glass-Steagal Act, which had regulated the financial sector. For all his grace and touch, Barack Obama, who didn’t possess a narrative either (except “hope”), was slowly reeled in by those who owned the means of persuasion.

As I warned in April, the result is first disempowerment then disenfranchisement. If the dominant ideology stops governments from changing social outcomes, they can no longer respond to the needs of the electorate. Politics becomes irrelevant to people’s lives; debate is reduced to the jabber of a remote elite. The disenfranchised turn instead to a virulent anti-politics in which facts and arguments are replaced by slogans, symbols and sensation. The man who sank Hillary Clinton’s bid for the presidency was not Donald Trump. It was her husband.

The paradoxical result is that the backlash against neoliberalism’s crushing of political choice has elevated just the kind of man that Hayek worshipped. Trump, who has no coherent politics, is not a classic neoliberal. But he is the perfect representation of Hayek’s “independent”; the beneficiary of inherited wealth, unconstrained by common morality, whose gross predilections strike a new path that others may follow. The neoliberal thinktankers are now swarming round this hollow man, this empty vessel waiting to be filled by those who know what they want. The likely result is the demolition of our remaining decencies, beginning with the agreement to limit global warming.

Those who tell the stories run the world. Politics has failed through a lack of competing narratives. The key task now is to tell a new story of what it is to be a human in the 21st century. It must be as appealing to some who have voted for Trump and Ukip as it is to the supporters of Clinton, Bernie Sanders or Jeremy Corbyn.

A few of us have been working on this, and can discern what may be the beginning of a story. It’s too early to say much yet, but at its core is the recognition that – as modern psychology and neuroscience make abundantly clear – human beings, by comparison with any other animals, are both remarkably social and remarkably unselfish. The atomisation and self-interested behaviour neoliberalism promotes run counter to much of what comprises human nature.

Hayek told us who we are, and he was wrong. Our first step is to reclaim our humanity.


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[Nov 01, 2019] Monthly Review Absolute Capitalism

Nov 01, 2019 | monthlyreview.org

The French poet Charles Baudelaire wrote in 1864 that "the cleverest ruse of the Devil is to persuade you he does not exist!" 1 I will argue here that this is directly applicable to today's neoliberals, whose devil's ruse is to pretend they do not exist. Although neoliberalism is widely recognized as the central political-ideological project of twenty-first-century capitalism, it is a term that is seldom uttered by those in power. In 2005, the New York Times went so far as to make neoliberalism's nonexistence official by running an article entitled "Neoliberalism? It Doesn't Exist." 2

Behind this particular devil's ruse lies a deeply disturbing, even hellish, reality. Neoliberalism can be defined as an integrated ruling-class political-ideological project, associated with the rise of monopoly-finance capital, the principal strategic aim of which is to embed the state in capitalist market relations. Hence, the state's traditional role in safeguarding social reproduction -- if largely on capitalist-class terms -- is now reduced solely to one of promoting capitalist reproduction. The goal is nothing less than the creation of an absolute capitalism. All of this serves to heighten the extreme human and ecological destructiveness that characterizes our time.

The Origins of Neoliberalism

The notion of neoliberalism is nearly a century old, although its main political influence is much more recent. It first arose as an ideology in the early 1920s in the face of the collapse of liberalism nearly everywhere in Europe, and in response to the rise of German and Austrian social democracy, particularly developments in Red Vienna. 3 It had its first notable appearance in Austrian economist and sociologist Ludwig von Mises's three works: Nation, State, and Economy (1919), Socialism (1922), and Liberalism (1927). 4 Mises's ideas were immediately recognized as representing a sharp departure from classical liberalism, leading the prominent Austro-Marxist Max Adler to coin the term neoliberalism in 1921. Mises's Socialism was subjected to a sharp critique by another gifted Austro-Marxist, Helene Bauer, in 1923 and to a more extended critique entitled "Neoliberalism" by the German Marxist Alfred Meusel, writing for Rudolf Hilferding's Die Gesellschaft in 1924. 5

For Meusel and Bauer, the neoliberal doctrine presented by Mises was far removed from classical liberalism and constituted a new doctrine devised for the era of "mobile capital" or finance capital, of which Mises was a "faithful servant." 6 It was expressly aimed at justifying the concentration of capital, the subordination of the state to the market, and an openly capitalist system of social control. Mises's neoliberalism, Meusel wrote, was characterized by the "merciless radicalism with which he attempts to derive the totality of social manifestations from a single principle" of competition. Everything opposed to the complete ascendance of the competitive principle was characterized by Mises as "destructionism," which he equated with socialism. For Mises, Charles Dickens, William Morris, George Bernard Shaw, H. G. Wells, Émile Zola, Anatole France, and Leo Tolstoy were all "without perhaps being aware of it recruiting agents for Socialism paving the way for destructionism," while actual Marxists were nothing more than destructionists, pure and simple. 7

In Liberalism , Mises explicitly distinguished between "the older liberalism and neoliberalism" on the basis of the former's commitment, at some level, to equality, as opposed to the complete rejection of equality (other than equality of opportunity) by the latter. 8 The question of democracy was resolved by Mises in favor of "a consumers' democracy." Where democracy is concerned, he wrote, "free competition does all that is needed. The lord of production is the consumer." 9

Mises was to exert an enormous influence on his younger follower Friedrich von Hayek, who was originally drawn to Mises's Socialism and who attended Mises's private seminars in Vienna. They shared a hatred of the Austro-Marxists' Red Vienna of the 1920s. In the early 1930s, Hayek left Vienna for the London School of Economics at the invitation of Lionel Robbins, an early British neoliberal economist. Mises took on the role of economic consultant to the Austrofascist Chancellor/dictator Engelbert Dollfuss prior to the Nazi takeover. In his work Liberalism , Mises declared: "It cannot be denied that Fascism and similar movements [on the right] aiming at the establishment of dictatorships are full of the best intentions and that their intervention has, for the moment, saved European civilization. The merit that Fascism has thereby won for itself will live on eternally in history." 10 He later emigrated to Switzerland and then to the United States with the support of the Rockefeller Foundation, taking up a teaching post at New York University.

The Great Transformation Reversed

The most important critique of neoliberalism in the early post-Second World War years was to be Karl Polanyi's attack on the myth of the self-regulating market in The Great Transformation , published in 1944, at a time when the allied victory was already certain and the nature of the postwar order in the West was becoming clear. Polanyi's critique grew out of his earlier defense of Red Vienna in the 1920s, where he had identified to a considerable extent with Austro-Marxists like Adler and Otto Bauer, strongly opposing the views of Mises, Hayek, and others on the right. The neoliberal project, Polanyi explained in The Great Transformation , was to embed social relations in the economy, whereas prior to capitalism the economy had been "embedded in social relations." 11 Polanyi's book, however, appeared in a context in which it was assumed that the neoliberal perspective was all but doomed, with the "great transformation" standing for the triumph of state regulation of the economy, at a time when John Maynard Keynes was recognized as the dominant figure in state-economic policy, in what came to be known as the Age of Keynes.

Nevertheless, Polanyi's deeper concerns regarding attempts to rejuvenate market liberalism were, in part, justified. The Walter Lippmann Colloquium held in France in 1938, just prior to the outbreak of the Second World War, with Mises and Hayek both present, had constituted the first step at creating a capitalist international among major intellectual figures. At the time, the term neoliberalism was explicitly adopted by some participants, but was to be later abandoned, no doubt with the memory of the strong critiques that arose in the 1920s. 12 Still, the neoliberal project was taken up again after the war. In 1947, a mere three years after the publication of Polanyi's The Great Transformation , the Mont Pèlerin Society was established. It was to become the institutional basis, along with the University of Chicago Department of Economics, for the reemergence of neoliberal views. A key participant in the inaugural conference, in addition to Mises, Hayek, Robbins, Milton Friedman, and George Stigler, was Karl Polanyi's younger brother, Michael Polanyi, the noted chemist, philosopher of science, and virulent Cold Warrior. 13

Keynesianism dominated the entire period of what is now sometimes called the Golden Age of capitalism in the first quarter-century after the Second World War. But in the mid–1970s, with the appearance of a major economic crisis and the beginnings of economic stagnation first manifested as stagflation, Keynesianism disappeared within the economic orthodoxy. It was to be replaced by neoliberalism, first in the guise of monetarism and supply-side economics, and then in the form of a generalized restructuring of capitalism worldwide and the creation of a market-determined state and society. 14

The critical figure who best captured the essence of neoliberalism almost the moment that it rose to dominance, analyzing it extensively in his 1979 lectures at the Collège de France on The Birth of Biopolitics , was Michel Foucault. 15 As Foucault brilliantly explained, the role of the state is no longer to protect property, as in Adam Smith, or even to be an executive for the common interests of the capitalist class, as in Karl Marx. Rather, its role under neoliberalism became one of the active expansion of the market principle, or the logic of capitalist competition, to all aspects of life, engulfing the state itself. As Foucault wrote,

Instead of accepting a free market defined by the state and kept as it were under state supervision -- which was, in a way, the initial formula of liberalism, [neoliberals] turn the formula around and adopt the free market as [the] organizing and regulating principle of the state. In other words: a state under the supervision of the market rather than a market supervised by the state.

And what is important and decisive in current neo-liberalism can, I think, be situated here. For we should not be under any illusion that today's neo-liberalism is, as is too often said, the resurgence or recurrence of old forms of liberal economics which were formulated in the eighteenth and nineteenth centuries and are now being reactivated by capitalism for a variety of reasons to do with its impotence and crises as well as with some more or less local and determinate political objectives. In actual fact, something much more important is at stake in modern neo-liberalism. What is at issue is whether a market economy can in fact serve as the principle, form, and model for a state which, because of its defects, is mistrusted by everyone on both the right and the left, for one reason or another. 16

In a nutshell, Foucault declared: "The problem of neo-liberalism is how the overall exercise of political power can be modeled on the principles of the market economy." Its single-minded goal is "privatized social policy." 17

In the neoliberal era, the state was not to intervene to counter the effects of the system, but was simply to promote through its interventions the spread of the rule-based system of the market into all recesses of society. It was thus the guarantor of a self-regulating and expansive market, from which neither the society nor the state itself were immune. 18 Monopoly and oligopoly were no longer considered violations of the principle of competition, but mere manifestations of competition itself. 19 Perhaps most important in distinguishing classical liberalism and neoliberalism, according to Foucault, was the emphasis of the former on a fictional equal exchange or quid pro quo . For neoliberalism, in contrast, free competition, reinterpreted to embrace monopoly power and vast inequalities, was the governing principle, not exchange. 20

The overriding of the state's social-reproductive role in favor of neoliberal financialization was most apparent, Foucault argued, in the demise of social insurance, along with all forms of social welfare. In the neoliberal system, "it is up to the individual [to protect himself against risks] through all the reserves he has at his disposal," making the individual prey to big business without any protection from the state. The result of this shift was the further growth of privatized financial assets monopolized by a very few. 21

Neoliberalism, conceived in this way, is the systematic attempt to resolve the base-superstructure problem, perceived as an obstacle to capital, through the introduction of "a general regulation of society by the market" to be carried out by a state -- itself subordinated to the market principle. This new capitalist "singularity" is to be extended to all aspects of society, as an all-inclusive principle from which no exit is possible. 22 Even economic crises are to be taken as mere indicators of the need to extend the logic of the market further.

As Craig Allan Medlen, building on Paul A. Baran and Paul M. Sweezy's Monopoly Capital , explains in Free Cash, Capital Accumulation and Inequality , today's neoliberal order involves a systematic shift in the "boundary line" between state economic activities and the private sector. This boundary line has now shifted decisively against the state, leaving little room for the state's own consumption and investment, outside of the military sector, and with the state increasingly subsidizing the market and capital through its fiscal and monetary operations. 23

When neoliberalism reemerged in the late 1970s, it was thus as an opportunistic virus in a period of economic sickness. 24 The crisis of Keynesianism was related to deepening problems of surplus capital absorption or overaccumulation in the developing monopoly-capitalist economy. Neoliberal restructuring arose in these circumstances first in the forms of monetarism and supply-side economics, and then evolved into its current form with the financialization of the system, itself a response to economic stagnation. With the growth of excess capacity and stagnant investment, money capital increasingly flowed into the financial sector, which invented new financial instruments with which to absorb it. 25 Financial bubbles propelled the economy forward. None of this, however, removed the underlying stagnation tendency. In the decade since the Great Recession, as distinguished from all previous post-Second World War decades, the capacity-utilization rate in manufacturing in the United States has never surpassed 80 percent -- a level chronically insufficient to ignite net investment. 26

All of this reflects the transition from twentieth-century monopoly capital to twenty-first-century monopoly-finance capital. 27 This is evident in an explosion of credit and debt, institutionalized within the system despite periodic financial crises, leading to a whole new financial architecture for amassing wealth. The seizure of excess profits on a world scale through the new imperialism of the global labor arbitrage was made possible by digital systems of financial and technological control, and the opening of the world market after 1989. All of this has culminated in a globalized process of financialization and value capture, directed by the financial headquarters of multinational corporations at the apex of the capitalist world economy. 28

The diminishing role of the state both as an instrument of popular sovereignty and of social protection has led to a crisis of liberal democracy. The greatest inequality in history plus the undermining of the economic and social conditions of the vast majority of the population has given rise to massive, but still largely inarticulate, discontent. 29 Capital's response to this destabilizing situation has been to try to mobilize the largely reactionary lower-middle class against both the upper-middle class and the working class (especially through racist attacks on immigrants), while making the state outside the market the enemy -- a strategy that David Harvey has recently referred to as a developing "alliance" between neoliberalism and neofascism. 30

Absolute Capitalism and Social-System Failure

In Foucault's interpretation, neoliberalism is as remote from laissez-faire as it is from Keynesianism. As Hayek argued in The Constitution of Liberty , the neoliberal state is an interventionist, not laissez-faire, state precisely because it becomes the embodiment of a rule-governed, market-dictated economic order and is concerned with perpetuating and extending that order to the whole of society. If the neoliberal state is noninterventionist in relation to the economic sphere, it is all the more interventionist in its application of commodity principles to all other aspects of life, such as education, insurance, communications, health care, and the environment. 31

In this ideal, restructured neoliberal order, the state is the embodiment of the market and is supreme only insofar as it represents the law of value, which in Hayek's terms is virtually synonymous with the "rule of law." 32 The hegemonic class-property relations are encoded in the juridical structure and the state itself is reduced to these formal economic codes embodied in the legal system. 33 What Hayek means by "the rule of law," according to Foucault, is the imposition of "formal economic legislation" that "is quite simply the opposite of a plan. It is the opposite of planning." The object is to establish "rules of the game" that prevent any deviation from the logic of commodity exchange or capitalist competition, while extending these relations further into society, with the state as the ultimate guarantor of market supremacy. 34 Foucault contends that this principle was most explicitly enunciated by Michael Polanyi, who wrote in The Logic of Liberty : "The main function of the existing spontaneous order of jurisdiction is to govern the spontaneous order of economic life. [The] system of law develops and enforces the rules under which the competitive system of production and distribution operates." 35

Hence, the supremacy of the dominant social relations of production or hegemonic class-property forms is encoded in the rule of a commodified legal structure. The new Leviathan, which has discarded any precapitalist trappings, is no longer a force above or external to the realm of commodity exchange -- that is, a superstructure -- but is subordinated to the logic of the market, which it is its role to enforce. 36 This, Foucault suggests, is Max Weber's rational-legal order, which turns out to be simply the imposition of formal economic relations circumscribing the state. At the same time, the state is given the role of enforcing this new privatized order through its monopoly of the legitimate use of force. 37

Hence, Abraham Bosse's famous frontispiece for Thomas Hobbes's Leviathan , depicting the giant sovereign composed of individuals who have transferred their sovereignty to the monarch, would today take the form of a giant rational-legal individual in a two-piece suit composed internally of corporations, replacing the multitude. 38 The crownless sovereign power would now be portrayed as holding not a scepter in one hand and a sword in the other, but the fourteenth amendment of the U.S. Constitution (originally meant to ensure the rights of former slaves but transformed into the basis of corporate personhood) in one hand and a cruise missile in the other. The neoliberal Leviathan is a state that increasingly has a single function and follows a single market logic -- and in those terms alone it is absolute and represents an absolutist capitalism.

Naturally, absolute capitalism is not without contradictions, of which five stand out: economic, imperial, political, social-reproductive, and environmental. Together, they point to a general system failure. The economic-crisis tendencies are best viewed from the standpoint of Marx's wider critique of the laws of motion of capital. Economically, neoliberalism is a historical-structural product of an age of mobile monopoly-finance capital that now operates globally through commodity chains, controlled by the financial headquarters of the multinational corporations in the core of the world economy, which dominate international capital flows. 39 The inherent instability of the new absolute capitalism was marked by the Great Financial Crisis of 2007–9. 40 Overaccumulation and stagnation remain the central economic contradictions of the system, leading to corporate mergers and financialization (the shift toward the amassing of financial assets by speculative means) as the main countervailing factors. All of this, however, simply exacerbates the top-heavy character of twenty-first-century capitalism intensifying its already-existing long-term tendencies toward disequilibrium and crisis. 41

Neoliberal globalization refers specifically to the system of global labor arbitrage and commodity chains, coupled with the growth of worldwide monopolies. The fulcrum of this form of imperialism is the systematic exploitation of the fact that the difference in wages between the global North and South is greater than the difference in their productivities. This creates a situation whereby the low unit labor costs in emerging economies in the global South become the basis of today's supply chains and the new system of value capture. 42 These international economic conditions mark the advent of a new imperialism that is generating increasing global inequality, instability, and world struggle, made worse in our age by declining U.S. hegemony, which points to the prospect of widening and unlimited war.

As indicated above, the neoliberal regime represents a new synergy of state and market, with the increasing subordination of the social-reproduction activities of the state to capitalist reproduction. Whole sections of the state, such as central banking, and the main mechanisms of monetary policy, are outside effective governmental control and under the sway of financial capital. Under these circumstances, the state is increasingly viewed by the population today as an alien entity. This raises contradictions with respect to the three key social classes below the super-rich and the rich: the upper-middle class, the lower-middle class, and the working class.

In a broad sketch focusing on advanced capitalist society, the upper-middle class can be seen as consisting predominantly of a professional-technical stratum deeply suspicious of any attacks on government, since its position is dependent not simply on its economic class but also on the general system of political rights. It is therefore wedded to the liberal-democratic state. In contrast, when taken by itself, the lower-middle class, made up mainly of small business owners, middle management, and corporate-based white-collar salaried and sales workers (particularly the white, less-educated, rural, and fundamentalist-religious sectors), is generally antistate, procapital, and nationalist. It sees the state as chiefly benefitting its two main enemies: the upper-middle class and the working class -- the former perceived as benefitting directly from the state, the latter increasingly designated in racial terms. 43 The lower-middle class includes what C. Wright Mills called "the rearguarders" of the capitalist system, mobilized by the wealthy in times of crisis when a defense of capitalist interests is considered essential, but represents in itself an extremely volatile element of society. 44 The working class, essentially the bottom 60 percent of income earners in the United States, is the most oppressed and most diverse population (and thus the most divided), but nonetheless the enemy of capital. 45

The biggest threat to capital today, as in the past, is the working class. This is true both in the advanced capitalist countries themselves and even more so in the periphery, where the working class overlaps with the dispossessed peasantry. The working class is most powerful when able to combine with other subaltern classes as part of a hegemonic bloc led by workers (this is the real meaning of the Occupy Wall Street movement's "we are the 99%").

The 1 percent thus find themselves potentially without a political base, which remains necessary to continue the neoliberal, absolute-capitalist project. Thus, from Donald Trump to Jair Bolsonaro, we see the emergence of a tenuous working relationship between neoliberalism and neofascism, meant to bring the rear guard of the system into play. Here, the goal is to enlist the white, rural, religious, nationalistic lower-middle class as a political-ideological army on behalf of capital. But this is fraught with dangers associated with right-wing populism and ultimately threatens the demise of the liberal-democratic state. 46

The major gender, race, community, and class contradictions of capitalist society today reflect crises that extend beyond the narrow confines of workplace exploitation to the wider structures in which the lives of working people are embedded, including the major sites of social reproduction: family, community, education, health systems, communications, transportation, and the environment. The destruction of these sites of social reproduction, along with deteriorating working conditions, has brought back what Frederick Engels called "social murder," manifested in the declining life expectancy in recent years in the mature capitalist economies. 47 It is in these wider social domains that such issues as the feminization of poverty, racial capitalism, homelessness, urban-community decay, gentrification, financial expropriation, and ecological decline manifest themselves, creating the wider terrains of class, race, social-reproductive, and environmental struggle, which today are merging to a remarkable degree in response to neoliberal absolute capitalism. 48

The conflict between absolute capitalism and the environment is the most serious contradiction characterizing the system in this (or any)phase, raising the question of a "death spiral" in the human relation to the earth in the course of the present century. 49 The age of ecological reform, in the 1970s, was soon displaced by a new age of environmental excess. In absolute capitalism, absolute, abstract value dominates. In a system that focuses above all on financial wealth, exchange value is removed from any direct connection to use value. The inevitable result is a fundamental and rapidly growing rift between capitalist commodity society and the planet.

Exterminism or Revolution

As we have seen, Mises employed the notion of destructionism to characterize the role of socialism. So important was this in his perspective that he devoted the entire fifty-page-long Part 5 of his book Socialism to this topic. "Socialism," he wrote, "does not build; it destroys. For destruction is the essence of it." It simply carries out the "consumption of capital" with no replacement or increase. Destructionism was best characterized, in his view, as a society that in the present consumed to the utmost extent, with no concern for the future of humanity -- a future which he saw as residing in the accumulation of capital. 50

Ironically, today's monopoly-finance capital is typified by the very kinds of absolute destructionism that Mises so deplored. Although technological change (particularly via the military) continues to advance, capital accumulation (investment) is stagnant at the center of the system, except where spurred on temporarily by tax cuts on corporations and privatization of state activities. Meanwhile, income and wealth inequality is rising to stratospheric levels; workers worldwide are experiencing a decline in material conditions (economic, social, and ecological); and the entire planet as a place of human habitation is in jeopardy. All this is the result of a system geared toward the most egregious forms of exploitation, expropriation, waste, and predation on a world scale. Science now tells us that the capitalist juggernaut, if present trends continue , will soon undermine industrial civilization and threaten human survival itself -- with many of the worst effects occurring during the lifetime of today's younger generations.

A useful reference point, with which to gain a historical and theoretical perspective on the present planetary emergency, is Marx and Engels's analysis of conditions in colonial Ireland from the 1850s to the 1870s. 51 Here, the operative term was extermination . As Marx wrote in 1859, English (and Anglo-Irish) capitalists after 1846 -- marking the Great Irish Famine and the Repeal of the Corn Laws -- were involved in "a fiendish war of extermination against the cotters," or the mass of Irish peasant subsistence farmers "ground to the dust" and dependent on the cultivation of potatoes as a subsistence crop. Irish soil nutrients were being exported with Irish grain, without return, to feed English industry. 52 The decades immediately following the Great Famine were thus referred to by Engels as the Period of Extermination . 53 The term extermination as used here by Marx and Engels, along with many of their contemporaries, had two related meanings at the time: expulsion and annihilation . 54 Extermination thus summed up the terrible conditions then facing the Irish.

At the root of the Irish problem in the mid–nineteenth century was a "more severe form of the metabolic rift" associated with the colonial system. 55 With the gradual expulsion and annihilation after 1846 of the poor peasant farmers, who had been responsible for fertilizing the soil, the entire fragile ecological balance underlying the production of crops and the replacement of nutrients in Ireland was destabilized. This encouraged further rounds of clearances, expulsion of the peasantry, consolidation of farms, and the replacement of tillage with pasture geared to English meat consumption. The Irish peasants were thus faced, as Marx put it in 1867, with a choice between "ruin or revolution." 56

Today, analogous conditions are arising on a planetary scale, with subsistence farmers everywhere finding their conditions undermined by the force of global imperialism. Moreover, ecological destruction is no longer mainly confined to the soil, but has been extended to the entire Earth System, including the climate, endangering the population of the earth in general and further devastating those already existing in the most fragile conditions. In the 1980s, Marxist historian E. P. Thompson famously penned "Notes on Exterminism, the Last Stage of Civilisation" examining planetary nuclear and environmental threats. 57 It is no secret that human lives in the hundreds of millions, perhaps billions, are threatened this century by material destruction -- ecological, economic, and military/imperial. Innumerable numbers of species are now on the brink of extinction. Industrial civilization itself faces collapse with a 4°C increase in global average temperature, which even the World Bank says is imminent with the continuation of today's business as usual. 58 Hence, the old socialist slogan famously associated with Rosa Luxemburg, Socialism or Barbarism! , is no longer adequate and must be replaced either by Socialism or Exterminism! , or with Marx's Ruin or Revolution!

The neoliberal drive to absolute capitalism is accelerating the world toward exterminism or destructionism on a planetary scale. In perpetrating this demolition, capital and the state are united as never before in the post-Second World War world. But humanity still has a choice: a long ecological revolution from below aimed at safeguarding the earth and creating a world of substantive equality, ecological sustainability, and satisfaction of communal needs -- an ecosocialism for the twenty-first century.

[Oct 31, 2019] Globalists The End of Empire and the Birth of Neoliberalism Quinn Slobodian 9780674979529 Amazon.com Books

Notable quotes:
"... The core beliefs of these people was in a world where money, labor and products could flow across borders without any limit. Their vision was to remove these subjects (tariffs, immigration and controls on the movement of money) from the control of the democracy-based nation-state and instead vesting them in international organizations. International organizations which were by their nature undemocratic and beyond the influence of democracy. That rather than rejecting government power, what they rejected was national government power. They wanted weak national governments but at the same time strong undemocratic international organizations which would gain the powers taken from the state. ..."
"... The other thing that characterized many of these people was a rather general rejection of economics. While some of them are (at least in theory) economists, they rejected the basic ideas of economic analysis and economic policy. The economy, to them, was a mystical thing beyond any human understanding or ability to influence in a positive way. Their only real belief was in "bigness". The larger the market for labor and goods, the more economically prosperous everyone would become. A unregulated "global" market with specialization across borders and free migration of labor being the ultimate system. ..."
"... The author makes the point, though in a weak way, that the "fathers" of neoliberalism saw themselves as "restoring" a lost golden age. That golden age being (roughly) the age of the original industrial revolution (the second half of the 1800s). And to the extent that they have been successful they have done that. But at the same time, they have brought back all the political and economic questions of that era as well. ..."
"... He also makes a good point about the EEC and the organizations that came before the EU. Those organizations were as much about protecting trade between Europe and former European colonial possessions as they were anything to do with trade within Europe. ..."
"... But he has NOTHING to say about BIll Clinton or Tony Blair or EU expansion or Obama or even the 2008 economic crisis for that matter. Inexplicably for a book written in 2018, the content of the book seems to end in the year 2000. ..."
"... I'm giving it three stars for the first 150 pages which was decent work. The second half rates zero stars. ..."
"... It would have been better yet if the author had the courage to talk about the transformation of the parties of the left and their complicity in the rise of neoliberalism. The author also tends to waste lots of pages repeating himself or worse telling you what he is going to say next. One would have expected a better standard of editing by the Harvard Press. ..."
"... However, most importantly it follows the thinking and the thoughts behind the building of a global empire of capitalism with free trade, capital and rights. All the way to the new "human right" to trade. It narrows down what neoliberal thought really consist of and indirectly make a differentiation to the neoclassical economic tradition. ..."
"... Slobodan does a really masterful exposition of the roots of neoliberalism and neoliberals like Von Mises and Hayek by going all the way back to the 'Geneva School'. It is amazing to see the dedication and devotion of these water carriers for the owners of capital spend their entire life times devising subtle and sleight of hand schemes and methods to basically subvert society to serve the owners of capital. Fantastic work Slobodan. I await your next work. ..."
Oct 31, 2019 | www.amazon.com

Chosen by Pankaj Mishra as one of the Best Books of the Summer

Neoliberals hate the state. Or do they? In the first intellectual history of neoliberal globalism, Quinn Slobodian follows a group of thinkers from the ashes of the Habsburg Empire to the creation of the World Trade Organization to show that neoliberalism emerged less to shrink government and abolish regulations than to redeploy them at a global level.

Slobodian begins in Austria in the 1920s. Empires were dissolving and nationalism, socialism, and democratic self-determination threatened the stability of the global capitalist system. In response, Austrian intellectuals called for a new way of organizing the world. But they and their successors in academia and government, from such famous economists as Friedrich Hayek and Ludwig von Mises to influential but lesser-known figures such as Wilhelm Röpke and Michael Heilperin, did not propose a regime of laissez-faire. Rather they used states and global institutions―the League of Nations, the European Court of Justice, the World Trade Organization, and international investment law―to insulate the markets against sovereign states, political change, and turbulent democratic demands for greater equality and social justice.

Far from discarding the regulatory state, neoliberals wanted to harness it to their grand project of protecting capitalism on a global scale. It was a project, Slobodian shows, that changed the world, but that was also undermined time and again by the inequality, relentless change, and social injustice that accompanied it. >


Mark bennett , May 14, 2018

One half of a decent book

This is a rather interesting look at the political and economic ideas of a circle of important economists, including Hayek and von Mises, over the course of the last century. He shows rather convincingly that conventional narratives concerning their idea are wrong. That they didn't believe in a weak state, didn't believe in the laissez-faire capitalism or believe in the power of the market. That they saw mass democracy as a threat to vested economic interests.

The core beliefs of these people was in a world where money, labor and products could flow across borders without any limit. Their vision was to remove these subjects (tariffs, immigration and controls on the movement of money) from the control of the democracy-based nation-state and instead vesting them in international organizations. International organizations which were by their nature undemocratic and beyond the influence of democracy. That rather than rejecting government power, what they rejected was national government power. They wanted weak national governments but at the same time strong undemocratic international organizations which would gain the powers taken from the state.

The other thing that characterized many of these people was a rather general rejection of economics. While some of them are (at least in theory) economists, they rejected the basic ideas of economic analysis and economic policy. The economy, to them, was a mystical thing beyond any human understanding or ability to influence in a positive way. Their only real belief was in "bigness". The larger the market for labor and goods, the more economically prosperous everyone would become. A unregulated "global" market with specialization across borders and free migration of labor being the ultimate system.

The author shows how, over a period extending from the 1920s to the 1990s, these ideas evolved from marginal academic ideas to being dominant ideas internationally. Ideas that are reflected today in the structure of the European Union, the WTO (World Trade Organization) and the policies of most national governments. These ideas, which the author calls "neoliberalism", have today become almost assumptions beyond challenge. And even more strangely, the dominating ideas of the political left in most of the west.

The author makes the point, though in a weak way, that the "fathers" of neoliberalism saw themselves as "restoring" a lost golden age. That golden age being (roughly) the age of the original industrial revolution (the second half of the 1800s). And to the extent that they have been successful they have done that. But at the same time, they have brought back all the political and economic questions of that era as well.

In reading it, I started to wonder about the differences between modern neoliberalism and the liberal political movement during the industrial revolution. I really began to wonder about the actual motives of "reform" liberals in that era. Were they genuinely interested in reforms during that era or were all the reforms just cynical politics designed to enhance business power at the expense of other vested interests. Was, in particular, the liberal interest in political reform and franchise expansion a genuine move toward political democracy or simply a temporary ploy to increase their political power. If one assumes that the true principles of classic liberalism were always free trade, free migration of labor and removing the power to governments to impact business, perhaps its collapse around the time of the first world war is easier to understand.

He also makes a good point about the EEC and the organizations that came before the EU. Those organizations were as much about protecting trade between Europe and former European colonial possessions as they were anything to do with trade within Europe.

To me at least, the analysis of the author was rather original. In particular, he did an excellent job of showing how the ideas of Hayek and von Mises have been distorted and misunderstood in the mainstream. He was able to show what their ideas were and how they relate to contemporary problems of government and democracy.

But there are some strong negatives in the book. The author offers up a complete virtue signaling chapter to prove how the neoliberals are racists. He brings up things, like the John Birch Society, that have nothing to do with the book. He unleashes a whole lot of venom directed at American conservatives and republicans mostly set against a 1960s backdrop.

He does all this in a bad purpose: to claim that the Kennedy Administration was somehow a continuation of the new deal rather than a step toward neoliberalism.

His blindness and modern political partisanship extended backward into history does substantial damage to his argument in the book. He also spends an inordinate amount of time on the political issues of South Africa which also adds nothing to the argument of the book. His whole chapter on racism is an elaborate strawman all held together by Ropke. He also spends a large amount of time grinding some sort of Ax with regard to the National Review and William F. Buckley.

He keeps resorting to the simple formula of finding something racist said or written by Ropke....and then inferring that anyone who quoted or had anything to do with Ropke shared his ideas and was also a racist. The whole point of the exercise seems to be to avoid any analysis of how the democratic party (and the political left) drifted over the decades from the politics of the New Deal to neoliberal Clintonism.

Then after that, he diverts further off the path by spending many pages on the greatness of the "global south", the G77 and the New International Economic Order (NIEO) promoted by the UN in the 1970s.

And whatever many faults of neoliberalism, Quinn Slobodian ends up standing for a worse set of ideas: International Price controls, economic "reparations", nationalization, international trade subsidies and a five-year plan for the world (socialist style economic planning at a global level). In attaching himself to these particular ideas, he kills his own book. The premise of the book and his argument was very strong at first. But by around p. 220, its become a throwback political tract in favor of the garbage economic and political ideas of the so-called third world circa 1974 complete with 70's style extensive quotations from "Senegalese jurists"

Once the political agenda comes out, he just can't help himself. He opens the conclusion to the book taking another cheap shot for no clear reason at William F. Buckley. He spends alot of time on the Seattle anti-WTO protests from the 1990s. But he has NOTHING to say about BIll Clinton or Tony Blair or EU expansion or Obama or even the 2008 economic crisis for that matter. Inexplicably for a book written in 2018, the content of the book seems to end in the year 2000.

I'm giving it three stars for the first 150 pages which was decent work. The second half rates zero stars. Though it could have been far better if he had written his history of neoliberalism in the context of the counter-narrative of Keynesian economics and its decline.

It would have been better yet if the author had the courage to talk about the transformation of the parties of the left and their complicity in the rise of neoliberalism. The author also tends to waste lots of pages repeating himself or worse telling you what he is going to say next. One would have expected a better standard of editing by the Harvard Press.

Jesper Doepping , November 14, 2018
A concise definition of neoliberalism and its historical influence

Anybody interested in global trade, business, human rights or democracy today should read this book.

The book follow the Austrians from the beginning in the Habsburgischer empire to the beginning rebellion against the WTO. However, most importantly it follows the thinking and the thoughts behind the building of a global empire of capitalism with free trade, capital and rights. All the way to the new "human right" to trade. It narrows down what neoliberal thought really consist of and indirectly make a differentiation to the neoclassical economic tradition.

What I found most interesting is the turn from economics to law - and the conceptual distinctions between the genes, tradition, reason, which are translated into a quest for a rational and reason based protection of dominium (the rule of property) against the overreach of imperium (the rule of states/people). This distinction speaks directly to the issues that EU is currently facing.

Edoardo Angeloni , January 1, 2019
A very interesting book about the modern society.

The author explicates how with Hayek and von Mises the economics of the central Europe has had a development, such that we can consider it a true entry in the modernity.

The structures which the neo-liberalism introduced were truly important for allowing the social progress. So some politicians have had the way for following particular models, which also today are considered with interest by many experts. The result is that the globalization has given to the several countries the same possibility . This competence has a strong value, because the author has a clear style and an efficient vision of the reality.

<img src="https://images-na.ssl-images-amazon.com/images/S/amazon-avatars-global/default._CR0,0,1024,1024_SX48_.png"/> PaulArt , November 30, 2018
Neoliberalism - Present at Creation

This is a fantastic God send for those who are interested in the neoliberal disease that has caught this globe in the last 3 decades. It is different from other books like 'A Brief History of Neoliberalism' by David Harvey.

The difference is that Slobodan does a really masterful exposition of the roots of neoliberalism and neoliberals like Von Mises and Hayek by going all the way back to the 'Geneva School'. It is amazing to see the dedication and devotion of these water carriers for the owners of capital spend their entire life times devising subtle and sleight of hand schemes and methods to basically subvert society to serve the owners of capital. Fantastic work Slobodan. I await your next work.

[Sep 11, 2019] Chile, September 11, 1973 The Horrors of 'the First 9-11' Are Routinely Overlooked

Sep 11, 2019 | www.globalresearch.ca

Chile, September 11, 1973: The Horrors of 'the First 9/11' Are Routinely Overlooked Each September large memorials are held for the 9/11 attacks on the US. Yet few recall the far more destructive 9/11 that occurred 28 years before. By Shane Quinn Global Research, September 11, 2019 The Duran and Global Research 8 September 2017 Region: Latin America & Caribbean , USA Theme: History , Media Disinformation , US NATO War Agenda

This article was originally published in September 2017.

On September 11, 1973, Salvador Allende 's democratic government in Chile was ousted by United States-backed forces in one of the Cold War's defining moments. Allende himself was killed during the coup while his presidential palace, La Moneda, was extensively bombed. Many thousands of Chileans were either murdered, "disappeared", imprisoned, and coerced to emigrate or enter exile. Allende's widow and family were forced to go into hiding in Mexico for many years.

In replacing Allende the Americans installed General Augusto Pinochet , one of the most notorious of the post-Second World War dictators. During the next 17 years of Pinochet's dictatorship around 40,000 Chileans were tortured – often under the most sadistic fashion and overseen by doctors in the Josef Mengele style (the Nazi doctor at Auschwitz). The doctors would ensure the victims would remain alive for as long as possible, administer medication to resuscitate them, so the torture could then recommence.

A Chilean who suffered such treatment in these chambers, but survived and later became an international lawyer, was asked where these doctors are today? He replied , "they're practicing in Santiago". There have been a number of Mengele-style doctors not only walking free in Chile, but resuming employment unhindered.

There have been no calls from the United States or Israel to bring these Nazi-style physicians to justice. Indeed, the Pinochet regime was already protecting Nazi war criminals such as SS Colonel Walter Rauff , creator of the gas chambers, and Mengele himself.

As the US's population is approximately 18 times bigger than Chile's, with an infinitely bigger landmass, the Chilean 9/11 was felt on a far greater scale. Indeed, it was also more destructive. In the US's 9/11, the White House was not bombed, the President ( George W. Bush ) was not killed, its people were not imprisoned and tortured en masse after the initial crimes were committed, a brutal dictator and his death squads were not imposed.

Before the Chilean coup in 1973, the country had been a lively, vibrant place where people were welcoming and cheerful. The Pinochet years afflicted upon the population persistent feelings of terror and suspicion.

A few days after the coup was implemented National Security Adviser Henry Kissinger described the situation in Chile as,

Forty Years Since the Chilean Coup of September 11, 1973

"Nothing of very great consequence".

U.S. Secretary of State Henry Kissinger with Pinochet in 1976 (Source: Wikimedia Commons )

Except to the people of Chile that is. Following Allende's election three years before, Kissinger told CIA director Richard Helms over the phone,

"We will not let Chile go down the drain", to which Helms responded, "I am with you".

Kissinger, a future Nobel Peace Prize winner, had been implicated in other war crimes such as an open call for genocide in Cambodia in 1969, "Anything that flies on everything that moves".

Disturbed by Allende's election victory in early September 1970, US President Richard Nixon ordered the CIA to, "prevent Allende from coming to power or to unseat him". Allende was not due to take office until two months later. The US State Department suggested to, "let Allende come in and see what we can work out", – the words "work out" denoting a sinister undertone judging by the record books.

However, President Nixon rejected the State Department's proposal, protesting the possibility of,

"Like another Castro? Like in Czechoslovakia? The same people said the same thing. Don't let them do that".

President Nixon expressed caution saying that,

"We don't want a big story leaking out that we are trying to overthrow the government", before warning Kissinger "to be sure the paper record doesn't look bad".

Kissinger forwarded to Secretary of State William Rogers that,

"The President's view is to do the maximum possible to prevent an Allende takeover".

The aim of the Nixon administration in attempting to overthrow Allende's incoming government was to destroy independent nationalism, or what was called a "virus" that might "infect" others – the domino effect. After all Henry Stimson , the US Secretary of War during World War II, described Latin America as "our little region over here which has never bothered anybody".

Chile obviously came under the auspices of "our little region", despite the fact its capital Santiago is over 8,000 km from Washington. The rights of nations to manage their own affairs is an unacceptable prospect to US planners. We see examples of this to the present day.

In the meantime, "the maximum possible to prevent an Allende takeover" failed as the former physician successfully assumed office in November 1970. The CIA had been sent to work in building support for Allende's rival, former President Jorge Alessandri , but to no avail. Instead the CIA exerted covert pressure, including paying millions of dollars to opposition groups to speed up Allende's ousting.

The four-week tour of Chile by Cuban leader Fidel Castro in late 1971 further alarmed policymakers in the US. Allende himself had visited Cuba about a decade before, and had been impressed by the progress made by Castro's revolution, before again visiting the island nation in 1972.

Image result for allende castro

Fidel Castro with Salvador Allende (Source: teleSUR / Twitter )

By the following year Allende was ousted and killed, with crucial CIA input, as Pinochet went about privatising the Chilean economy to suit American corporate requirements. The "Chicago boys", neoliberal Chilean economists trained at University of Chicago, were welcomed into the government – and were supported by the IMF and the World Bank.

The Chicago boys' policies had a disastrous effect on the population as unemployment more than doubled between 1974 and 1975, to over 18%. By 1983 unemployment further rocketed to 34.6%, far worse than the Great Depression in the US.

The population revolted at various stages but this is where Pinochet's brutal methods of repression came in useful, and was no doubt welcomed by the US government, IMF, and so on. Furthermore, Pinochet was a major drug trafficker who sold cocaine to the US and Europe in the 1980s, amassing a personal fortune in the process, along with his cronies. Pinochet, who also had links to Colombian drug dealers, said

"Not a leaf moves in Chile if I don't move it – let that be clear".

Meanwhile, the population continued to slide into poverty and desolation.

*

Note to readers: please click the share buttons above. Forward this article to your email lists. Crosspost on your blog site, internet forums. etc.

Shane Quinn obtained an honors journalism degree. He is interested in writing primarily on foreign affairs, having been inspired by authors like Noam Chomsky. He is a frequent contributor to Global Research.

The original source of this article is The Duran and Global Research Copyright © Shane Quinn , The Duran and Global Research , 2019

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[Sep 11, 2019] Chile, September 11, 1973 The Inauguration of Neoliberalism, Shock Treatment and the Instruments of Economic Repression

Notable quotes:
"... In the wake of the military coup and following the engineered hike in food prices, I estimated that approximately 85% of the Chilean population did not meet minimum calorie and protein requirements as defined by the World Health Organization (WHO). ..."
"... In October 1973, the "official" food price index had increased by 82.3 percent (in relation to September), according to the Instituto Nacional de Estadistica, which had been taken over by the Junta. ..."
"... Food prices had increased by 211.1 percent in October and November 1973 in relation to September, according to my estimates of 31 food categories. (The official November figures pointed to an increase of 88.6 percent in relation to September). And thereafter, it was on the basis of these official (fake) statistics that the movement in real purchasing power was estimated and official wage adjustments were implemented. ..."
"... I left Chile for Peru in December 1973. The report was released as a working paper (200 copies) by the Catholic University a few days before my departure. In Peru, where I joined the Economics Department of the Catholic University of Peru, I was able to write up a more detailed study of the Junta's neoliberal reforms and their ideological underpinnings. This study was published in 1974-75 in English and Spanish. ..."
Sep 11, 2019 | www.globalresearch.ca

Chile, September 11, 1973: The Inauguration of Neoliberalism, "Shock Treatment" and the Instruments of Economic Repression: The Junta's Deadly "Economic Medicine" Salvador Allende was assassinated on the orders of Henry Kissinger By Prof Michel Chossudovsky Global Research, September 11, 2019 Region: Latin America & Caribbean , USA Theme: Global Economy , History , Poverty & Social Inequality

"Workers of my country, I have faith in Chile and its destiny.

Other men will overcome this dark and bitter moment when treason seeks to prevail.

Keep in mind that, much sooner than later, the great avenues will again be opened through which will pass free men to construct a better society.

Long live Chile!

Long live the people! Long live the workers!"

President Salvador Allende's farewell speech, 11 September 1973.

"It's hard to find someone with the fighting spirit, courage and the story of Allende. He was a man who actually had the branded name in history: democratically the left came to power, and by bombs he was removed from government." Senador Pedro Simon

Chile: "Shock Treatment" and the Mechanisms of Economic Repression

Immediately following Allende's election in September 1970 and prior to his inauguration in November 1970:

"Kissinger initiated discussion on the telephone with CIA director Richard Helm's about a preemptive coup in Chile. "We will not let Chile go down the drain," Kissinger declared. "I am with you," Helms responded. Their conversation took place three days before President Nixon, in a 15-minute meeting that included Kissinger, ordered the CIA to "make the economy scream," and named Kissinger as the supervisor of the covert efforts to keep Allende from being inaugurated. ( National Security Archive )

The CIA was the lead organization behind the imposition of a neoliberal economic agenda in Chile. In August 1972, a year prior to the coup, the CIA funded a 300-page economic blueprint to be implemented in the wake of the overthrow of the Allende government.

The ultimate objective of the September 11, 1973 military coup in Chile was the imposition of the neoliberal agenda (aka deadly "economic medicine") leading to the impoverishment of an entire nation.

Wall Street was behind the coup, working hand in glove with the CIA, the US State Department and Chile's economic elites. Henry Kissinger was the Go-Between.

After Allende's election in November Wall Street's major commercial banks (including Chase Manhattan, Chemical, First National City, Manufacturers Hanover, and Morgan Guaranty), cancelled credits to Chile. In turn, in 1972, Kennecott Corporation "tied up Chilean copper exports with lawsuits in France, Sweden, Italy, and Germany". (See John M. Swomley, Jr. "The Political Power of Multinational Corporations," Christian Century, 91 (25 September 1974), p. 881.

"Regime change" was enforced through a covert CIA military intelligence operation, which laid the groundwork for the military takeover, the assassination of president Allende as well as the macro-economic reforms to be adopted in the wake of the military coup.

At the time of the September 11, 1973 military coup, I was Visiting Professor of Economics at the Catholic University of Chile. In the hours following the bombing of the Presidential Palace of La Moneda, the new military rulers imposed a 72-hour curfew.

Salvador Allende in the defense of the Palacio de la Moneda, September 11, 1973 (left)

When the university reopened several days later, I started patching together the history of the coup from written notes. I had lived through the September 11, 1973 coup as well as the failed June 29th coup. Several of my students at the Universidad Catolica had been arrested by the military Junta.

Chicago Economics, Chilean Style

Sweeping macro-economic reforms (including privatization, price liberalization and the freeze of wages) were implemented in early October 1973.

Barely a few weeks after the military takeover, the military Junta headed by General Augusto Pinochet ordered a hike in the price of bread from 11 to 40 escudos, a hefty overnight increase of 264%. This "economic shock treatment" had been designed by a group of economists called the "Chicago Boys," many of whom were my colleagues at the Institute of Economics of the Catholic University.

These deadly macro-economic reforms were largely dictated by Wall Street in liaison with the CIA, with "Chicago Economics" providing an ideological "free market" paradigm and justification. Professors Milton Friedman and Arnold Harberger of Chicago University were by no means the driving force behind these reforms.

While food prices had skyrocketed, wages had been frozen to ensure "economic stability and stave off inflationary pressures." From one day to the next, an entire country had been precipitated into abysmal poverty; in less than a year the price of bread in Chile increased thirty-six fold (3700%). Eighty-five percent of the Chilean population had been driven below the poverty line.

In November 1973, following the dramatic hikes in the price of food, I drafted in Spanish an initial "technical" assessment of the Junta's deadly macro-economic reforms.

Together with a medical doctor, colleague and lifelong friend who was teaching at the Faculty of Medicine of the University of Chile, I estimated the impacts of the economic reforms on the levels of undernourishment, which had resulted from the collapse of the standard of living.

In the wake of the military coup and following the engineered hike in food prices, I estimated that approximately 85% of the Chilean population did not meet minimum calorie and protein requirements as defined by the World Health Organization (WHO).

In October 1973, the "official" food price index had increased by 82.3 percent (in relation to September), according to the Instituto Nacional de Estadistica, which had been taken over by the Junta.

The INE figures on the price of food commodities, however, had been falsified. In November, I proceeded to collect and tabulate the actual rate of increase in food prices from directly observed prices in the Santiago Metropolitan area. I discovered a substantial discrepancy in relation to the official statistics.

Food prices had increased by 211.1 percent in October and November 1973 in relation to September, according to my estimates of 31 food categories. (The official November figures pointed to an increase of 88.6 percent in relation to September). And thereafter, it was on the basis of these official (fake) statistics that the movement in real purchasing power was estimated and official wage adjustments were implemented.

Fearing censorship by the Junta led by General Augusto Pinochet, I limited my analysis to the collapse of living standards in the wake of the Junta's reforms, resulting from the price hikes of food and fuel, focussing on statistical estimates, without making any kind of political analysis.

The Economics Institute of the Catholic University was initially reluctant to publish the report. They sent it to the Military Junta prior to its release.

The opinions expressed in this report are those of the author. Therefore, they are of the author's responsibility and do not compromise the Institute of Economics

(This was first time that the Institute chose to publish a disclaimer)

I left Chile for Peru in December 1973. The report was released as a working paper (200 copies) by the Catholic University a few days before my departure. In Peru, where I joined the Economics Department of the Catholic University of Peru, I was able to write up a more detailed study of the Junta's neoliberal reforms and their ideological underpinnings. This study was published in 1974-75 in English and Spanish.

Economic Repression

By March 1974, food prices in Chile (according to my estimates) had increased by 505.5 percent (since September 1973). Real wages had collapsed.

Chile: The movement of real wages (1970-77) based on official statistics

Source: Rudiger Dornbusch, Sebastian Edwards. Macroeconomic Populism in Latin America http://www.nber.org/papers/w2986 (p20)

The above graph (based on official statistics) shows that real wages collapsed by close to 70 percent in relation to the base period (1970), which also corresponds to the beginning of the Unidad Popular (UP) government of Salvador Allende. The collapse in real wages was greater than that indicated by the official statistics.

It is worth noting that in 1971, the Allende government increased real wages by 20%. The collapse from its 1971 level to early 1974 was of the order of 75% based on official statistics of the cost of living. A wage increase was implemented by the Junta in early March of 1974 (see graph above).

The Destruction of Economic Life

The events of September 11 1973 marked me profoundly in my work as an economist. Through the tampering of prices, wages and interest rates, people's lives had been destroyed; an entire national economy had been destabilized. Macro-economic reform was neither "neutral" –as claimed by the academic mainstream– nor separate from the broader process of social and political transformation.

I also started to understand the role of military-intelligence operations in support of what is usually described as a process of "economic restructuring". In my earlier writings on the Chilean military Junta, I looked upon so-called "free market" reforms as well-organized instruments of "economic repression."

Macro-Economics and Geopolitics are intertwined. The economic dimensions of US led wars must be understood. The destruction of economic life in Afghanistan, Iraq, Syria and Libya constitutes a crime against humanity, i.e. an "Economic Genocide" which consists in destabilizing and deliberately sabotaging a national economy.

While the contemporary mechanisms of intervention ("color revolutions", "war on terrorism", economic destabilization, sanctions, etc) are different to those of the 1970s, the ultimate objective is the derogation of national sovereignty and the imposition of neoliberalism:

I recall that in the months leading up to the September 1973 coup in Chile, the distribution of basic consumer goods and food had been deliberately disrupted through market manipulation. No bread, no milk, no sugar were available at government regulated prices. Chile's escudo was worthless. The black market prevailed.

A similar situation is now unfolding in Venezuela where the national currency has collapsed. Black market prices for food and essential commodities have spiralled. Reminiscent of Chile in 1973, foreign exchange (Forex) market manipulation in Venezuela coupled with sabotage triggers food shortages, poverty and political instability. Concurrent with the engineered collapse of the Bolivar, real purchasing power has plummeted. (see below)

Source: Los Angeles Times, May 31, 2016

Michel Chossudovsky, September 17, 2016 Forty Years Since the Chilean Coup of September 11, 1973

sources:

Michel Chossudovsky, La medicion del ingreso minimo de subsistencia y la politica de ingresos para 1974 , Documentos de Trabajo no. 18, Noviembre de 1973.

Michel Chossudovsky, The Neo-liberal Model and the Mechanisms of Economic Repression, The Chilean Case, Research Paper No. 7411, Department of Economics, University of Ottawa, 1974, published in Co-Existence, Vol 12, 1975

Michel Chossudovsky, Hacia el nuevo modelo economico chileno : inflación y redistribución del ingreso, El trimestre económico . Mexico, Vol. 42. 1975, 2, p. 311-347.

* * *

The videos below describe the preparation of the September 11, 1973 military coup and its aftermath.

Video: CIA, Chile and Allende

https://www.youtube.com/embed/8R7MNnoYktM Chile: The First Start. The Inauguration of Neoliberalism

https://www.youtube.com/embed/dRRUpO5kPhw?feature=oembed

The original source of this article is Global Research Copyright © Prof Michel Chossudovsky , Global Research, 2019

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[Aug 12, 2019] Hudson contributions on understanding the origin and social dynamics of neoliberalism

Aug 12, 2019 | www.moonofalabama.org

karlof1 , Aug 11 2019 21:27 utc | 18

Responding to several questions in the last open thread, I mentioned the fact that Epstein's case reflects the great amount of corruption prevalent within the Outlaw US Empire, and it's that aspect of the case that might be used as a campaign issue, particularly since Sanders is going to great lengths to point to the utterly corrupt and immoral nature of "health" insurance and Big Pharma. That was exactly the line he presented on today's Face The Nation program, despite the primary fccus being gun control:

"'The American people are sick and tired of powerful corporate interest determining what goes on in Washington,' Sanders said. 'You know that's whether it's the healthcare industry, whether it is the fossil fuel industry, whether it is the NRA.'"

The other important point Sanders made was the divisive nature of Trump's rhetoric--that becoming more divided now isn't in the nation's best interest:

"He is creating the kind of divisiveness in this nation that is the last thing we should be doing."

Ah, but that's exactly what the Current Oligarchy wants done--create an ever more divisive nation such that solidarity--and thus Movement Building--becomes ever harder to attain and realize.

karlof1 , Aug 11 2019 21:54 utc | 22

18 Cont'd--

IMO, it matters not whether Epstein's alive or dead. What matters is that a person like Epstein was able to become what Epstein became, which was enabled through the great, vast cesspool of corruption that the global elite inhabit. Epstein ought to become the Poster Boy for ridding the nation of government and elite corruption that affects every aspect of life here and everywhere. As many have said, Billionaires ought not to exist--no one individual should have that much wealth and power. The thesis embodied within Andrew Carnegie's Gospel of Wealth (PDF) ought to be made into law such that it's ensured that those fortunate enough to become well-off thanks to the public--directly or indirectly via government--return a great proportion of that wealth to their benefactors. IMO, had such a law been in force, the corruption that enabled Epstein would have had a more difficult time doing what it did.

Yes, there are other factors/actors involved that aided Epstein's racket. We have an excellent idea of who and what--China has the proper solution for such corruption. Ridding the world of those factors/actors ought to be equivalent to the Quest for The Grail.

At least comfort can come from knowing that the evil within Syria is currently being eradicated, and that additional evil plans are being thwarted thanks to the Forces of Resistance.

financial matters , Aug 12 2019 3:30 utc | 55

Ellen Brown has a good blog post up on China, https://ellenbrown.com/2019/08/09/neoliberalism-has-met-its-match-in-china/

Basically stating that China is too powerful for the US to overcome with its typical attempts to destroy anything that isn't completely controlled by private finance.

""What is mainly devalued when a currency is devalued, says Hudson, is the price of the country's labor and the working conditions of its laborers. The reason American workers cannot compete with foreign workers is not that the dollar is overvalued. It is due to their higher costs of housing, education, medical services and transportation. In most competitor countries, these costs are subsidized by the government.""

""China today is a peer competitor that is more formidable economically, more sophisticated diplomatically, and more flexible ideologically than the Soviet Union ever was. And unlike the Soviet Union, China is deeply integrated into the world and intertwined with the U.S. economy.""

"" The Chinese have proven the effectiveness of their public banking system in supporting their industries and their workers. Rather than seeing it as an existential threat, we could thank them for test-driving the model and take a spin in it ourselves.""

psychohistorian , Aug 12 2019 3:59 utc | 58

@ financial matters with the Ellen Brown link...thanks

Let me repeat one of the quotes that I want to expand upon

"" The Chinese have proven the effectiveness of their public banking system in supporting their industries and their workers. Rather than seeing it as an existential threat, we could thank them for test-driving the model and take a spin in it ourselves.""

While I agree overwhelmingly with the concept, I have come to think that Trump was (s)elected by the global elite to speed up the demise of he current Western way before enough "knowledge" of the China/Ellen Brown concept is widely held. I read an article at Strategic Culture (no link) about how the EU has ensconced the financial independence of the banking system in treaties that are much harder to change than by the politicians in Brussels.

The point I am trying to make is that the sooner the world crisis is brought to a head, the better chance global private finance has to survive the resulting reset. If the elite were to let the Western crazy go on longer there would be more of a chance of ALL the Western countries agreeing to try the China way....which is almost a prerequisite for success. The elite of global private finance need to survive in some form to stay relevant in the world and if China had more success under their belt (and road...grin) the glaring difference between the financial perfidy of the West would be more glaringly obvious that it is to many at this juncture.

I have been pondering what the heck is going on since Trump "won" and this now makes the most sense to me.

As example of the ignorance of the public I submit the limited support I get for my one note Samba here at what is purported to be an enlightened gathering of humanity....

The elite need to make their move while they still have control of the media/propaganda machine that continues to be very effective....but slipping

Grieved , Aug 12 2019 3:59 utc | 59

@55 financial matters

Wonderful link, thank you for the Ellen Brown piece. That Hudson interview at Guns and Butter is the gift that keeps on giving. Hudson is like a beef-stock cube: you have to give it time and add things to it but it's the highly condensed basis of a powerful stew. And what Brown adds is formidable.

It almost seems as if everyone is fine with how money is created. What's more important is how it circulates, and what it achieves. I love her remarks that China can add or subtract interest, carry or write off a loan, and in effect do everything with the money that it deems necessary to produce socially useful results.

The mistake of the old communist model was to "own" the means of production. The success of the new socialist systems that have learned from this lies in not caring who actually "owns" anything, but in making sure that the money of the economy works to produce the social good. If "ownership" is good for the people, let them own. But the money? That belongs to state control.

I enjoyed all the quotes from Ellen Brown's article you supplied - as I enjoy everything you infrequently post, by the way - and how about one more quote, addressing the threat of the Asian Tigers to the Chicago model, and how it was dealt with:

Just as the US had engaged in a Cold War to destroy the Soviet communist model, so Western financial interests set out to destroy this emerging Asian threat. It was defused when Western neoliberal economists persuaded Japan and the Asian Tigers to adopt the free-market system and open their economies and their companies to foreign investors. Western speculators then took down the vulnerable countries one by one in the "Asian crisis" of 1997-98. China alone was left as an economic threat to the Western neoliberal model, and it is this existential threat that is the target of the trade and currency wars today.

And what the west saw as the main threat was the state involvement in the economy. It was proving its value, as it did in creating the American Dream of the nineteen-fifties in the USA itself, and as it continues to do in all the modern socialist revolutionary states with their amazingly healthy economies - all tested in the trial-by-fire of US sanctions.

Many thanks again for the link. I would have missed that one, and it's a gem!

Hoarsewhisperer , Aug 12 2019 5:54 utc | 73
"The thesis embodied within Andrew Carnegie's Gospel of Wealth (PDF) ought to be made into law such that it's ensured that those fortunate enough to become well-off thanks to the public--directly or indirectly via government--return a great proportion of that wealth to their benefactors. IMO, had such a law been in force, the corruption that enabled Epstein would have had a more difficult time doing what it did."
...
Posted by: karlof1 | Aug 11 2019 21:54 utc | 22

That's precisely how Western economies operated until the 1960s. The UK was an outstanding example. Lord Nuffield (British Motor Corporation) paid 19 shillings and 6 pence on every Pound of income beyond the top threshold. The Beatles switched their affairs beyond the reach of the UK Taxman because their success yielded Nuffield-ish levels of income.
And Income Tax was just the tip of the iceberg. Estate Tax resulted in many Tr-raditional Old English estates being sold off to pay the Death Duties.

I have a hazy recollection that you're a fan of Michael Hudson's economic philosophy. If two-way communication is an option on Hudson's website, ask him to publish a chart hilighting the difference between Tax Scales of the 1950s and Tax Scales post-2010 in any Western country of his choice. It'll make your hair stand on end but it will also make it crystal clear WHY the Rich are getting richer and the Poor poorer in the (Thoroughly Modernised) 21st Century.
Buying politicians is the most lucrative investment of all...

karlof1 , Aug 12 2019 6:06 utc | 75

Hoarsewhisperer @73--

Thanks for your reply! Yes, I'm a Hudson fan. And I'm aware of what the tax levels were once-upon-a-time. The "Libertarian Swindle" that in part gave us Neoliberalism and Junk Economics was the active power behind the massive sea-change that has ruined so many good public works.

Milton Freidman, Margaret Thatcher, and several others on both sides of the pond deserve to have their bodies exhumed, drawn and quartered, then burned and the ashes thrown into the ocean for the evil they worked.

Formerly T-Bear , Aug 12 2019 8:58 utc | 82

@ karlof1 | Aug 12 2019 6:06 utc | 75

Thanks for mentioning '"Libertarian Swindle"' as door opener for the neoliberal economic agenda but it actually predates that. One must go back to post WWII politics with the early rebound of conservative efforts to regain political dominance; e.g. communists in state department (ca 1946-7); communists in military (McCarthyism 1947-9); Who lost China (1950-3); John Birch Society (1953-); a tome deaf Eisenhower administration (Dulles Bros. et al); Loss of Cuba (1958-present); 1968 Nixon "Law and Order" opening DoJ removing enforcement of regulatory law resulting regulatory capture by 'business'; 1980 smarmy election of Reagan using "Moral Majority" to open capture of government itself. Yes "Libertarian Swindle" was present in all this history and much more but that history is being clouded, subverted, destroyed and being made useless as more ignorant opinion is being used to replace knowledge of where we once were and where we had been. Once that takes complete effect, it shall be a house of mirrors henceforth; see how well any can navigate under those circumstances. Should predict that nothing will end well at that point.

c1ue , Aug 12 2019 17:06 utc | 108
@karlof1 #105
Hudson has never concealed that he does consulting work for many governments, as well as individuals.
Super Imperialism was translated into Chinese almost immediately.
As for tariffs: I'm sorry, but focusing on product prices is exactly what neo-liberal economists do. While tariffs *might* increase the prices of products from China (China's lowered exchange rate offsets the tariffs to a significant extent), it is the lack of jobs which really hurt Americans. As Dr. Michael Hudson has said repeatedly: when America was industrializing, it put heavy tariffs on classes of products in which the U.S. government wanted to grow its own manufacturing capacity for - and from these, American jobs.
Farmers in the US and EU, doctors, lawyers, pharm companies and many more verticals are heavily protected by walls of patents, accreditations and other import restrictions - it is the blue collar working class which is fully (and hypocritically) exposed to foreign competition.
And while I agree that most of the audience in Trump rallies can't articulate the above, they do know they've been fucked. And they want someone, anyone, and anyhow, to change that. Agreed that Trump may not be that president, but he's at least paying lip service to their pain - as opposed to the liberals who keep talking about training and competitiveness and other meritocratic bullshit.
karlof1 , Aug 12 2019 17:19 utc | 111
Another Hudson audio only program that is a must listen. What's discussed you won't read/hear/see in most media. Just the insider info about what Morgan Stanley told its Sovereign Wealth Fund holders is worth the listen as it's 100% related to the direction global finance is heading as de-dollarization accelerates. The background context to the verbal spat between Germany and the Outlaw US Empire's ambassador that occurred late last week I linked to and what that means is also discussed. For the 11 or so minutes Hudson gets to talk in answer to the questions posed, the information is outstanding. Again, the program was recorded on July 30th. Sorry for the delay in commenting about it, but finding time to listen/watch is too often at a premium for me, and today I was able to do some catching-up.

JW @107--

Yes, just as Westerners remarked about the "foreignness" of the East, we now hear similar things said by Chinese about the West. Curious isn't it.

[Aug 03, 2019] This is neoliberalism - introducing the invisible ideology

August 02, 2019
BarakalypseNow

Neoliberalism is an economic ideology that exists within the framework of capitalism. Over four decades ago, neoliberalism become the dominant economic paradigm of global society.

These BarakalypseNow video series, are tracing the history of neoliberalism, starting with a survey of neoliberal philosophy and research, a historical reconstruction of the movement pushing for neoliberal policy solutions, witnessing the damage that neoliberalism did to its first victims in the developing world, and then charting neoliberalism's infiltration of the political systems of the United States and the United Kingdom.

Learn how neoliberalism is generating crises for humanity at an unprecedented rate.

Neoliberalism was a reaction. It was an effort to disassemble a previous vision of society that once held sway over most of the world. In order to understand neoliberalism, it's important to first understand the world before neoliberalism; the world which neoliberalism considered unacceptable, and in need of urgent reconfiguration.

Learn about the world of embedded liberalism.

The story of neoliberalism is a story about the power of ideas. Embedded liberalism was in power, but it was not without resistance. Academics and businessmen who opposed the New Deal and British social democracy were only begrudgingly accepting of the situation at best, or on the warpath against government intervention in the economy at worst. These two factions allied with one another to create an idea so powerful that it would covertly undo their losses to embedded liberalism by supplanting it entirely. This is where the story of neoliberalism begins.

https://www.youtube.com/embed/myH3gg5o0t0

https://www.youtube.com/embed/EkBpqLWFNg4

https://www.youtube.com/embed/zsgwVz0D6rI

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[Jun 23, 2019] How neoliberalism managed to displace the New Deal capitalism

Mar 06, 2012 | discussion.theguardian.com

NotWithoutMyMonkey , 6 Mar 2012 04:22

The likes of BruceMajors here don't get it.

'Big-gubment' exists to enforce property-rights. Libertarians bleat on about how freedom is founded in the right own to property and yet fail to realise that these so-called 'rights', which are a negation of natural rights (the world and it's resources belongs to all equally, and that lands to land, water and seed are in essence premised on theft) requires a large, powerful and authoritarian apparatus capable of effectively projecting violence to enforce property rights. claims to property are premised on violence.

Your so-called philosophy fails on first premises.

And in case you don't get it, the threat of a worker revolution saw the welfare state arise as a carrot to complement the stick. With the stick becoming increasingly ineffective in the earlier part of the 20th century, the disquiet needed to be quelled through other means. That method was the social democratic welfare state. The collapse of Communism as an existential threat, followed by the emergence of economic globalisation (shopping around for the cheapest labour), consumerism and automation have all effectively eroded class solidarity amongst those most disenfranchised by a state enforced inequality and eroded the value of labour. The beneficiaries of the state as a mechanism for enforcing their claims to property no longer need the working classes.

Hence we find that around the world, western democracies are withdrawing the carrot and reasserting the stick.

[Mar 14, 2019] Neoliberalism: the deep story that lies beneath Donald Trump triumph by George Monbiot

Nov 14, 2016 | www.theguardian.com
The book was The Constitution of Liberty by Frederick Hayek . Its publication, in 1960, marked the transition from an honest, if extreme, philosophy to an outright racket. The philosophy was called neoliberalism . It saw competition as the defining characteristic of human relations. The market would discover a natural hierarchy of winners and losers, creating a more efficient system than could ever be devised through planning or by design. Anything that impeded this process, such as significant tax, regulation, trade union activity or state provision, was counter-productive. Unrestricted entrepreneurs would create the wealth that would trickle down to everyone.

This, at any rate, is how it was originally conceived. But by the time Hayek came to write The Constitution of Liberty, the network of lobbyists and thinkers he had founded was being lavishly funded by multimillionaires who saw the doctrine as a means of defending themselves against democracy. Not every aspect of the neoliberal programme advanced their interests. Hayek, it seems, set out to close the gap.

He begins the book by advancing the narrowest possible conception of liberty: an absence of coercion. He rejects such notions as political freedom, universal rights, human equality and the distribution of wealth, all of which, by restricting the behaviour of the wealthy and powerful, intrude on the absolute freedom from coercion he demands.

Democracy, by contrast, "is not an ultimate or absolute value". In fact, liberty depends on preventing the majority from exercising choice over the direction that politics and society might take.

He justifies this position by creating a heroic narrative of extreme wealth. He conflates the economic elite, spending their money in new ways, with philosophical and scientific pioneers. Just as the political philosopher should be free to think the unthinkable, so the very rich should be free to do the undoable, without constraint by public interest or public opinion.

The ultra rich are "scouts", "experimenting with new styles of living", who blaze the trails that the rest of society will follow. The progress of society depends on the liberty of these "independents" to gain as much money as they want and spend it how they wish. All that is good and useful, therefore, arises from inequality. There should be no connection between merit and reward, no distinction made between earned and unearned income, and no limit to the rents they can charge.

Inherited wealth is more socially useful than earned wealth: "the idle rich", who don't have to work for their money, can devote themselves to influencing "fields of thought and opinion, of tastes and beliefs". Even when they seem to be spending money on nothing but "aimless display", they are in fact acting as society's vanguard.

role="main" itemtype="http://schema.org/NewsArticle" itemscope="" data-test-id="article-root"> Thatcherism and Reaganism were not ideologies in their own right: they were just two faces of neoliberalism. Their massive tax cuts for the rich, crushing of trade unions, reduction in public housing, deregulation, privatisation, outsourcing and competition in public services were all proposed by Hayek and his disciples. But the real triumph of this network was not its capture of the right, but its colonisation of parties that once stood for everything Hayek detested.

Bill Clinton and Tony Blair did not possess a narrative of their own. Rather than develop a new political story, they thought it was sufficient to triangulate . In other words, they extracted a few elements of what their parties had once believed, mixed them with elements of what their opponents believed, and developed from this unlikely combination a "third way".

It was inevitable that the blazing, insurrectionary confidence of neoliberalism would exert a stronger gravitational pull than the dying star of social democracy. Hayek's triumph could be witnessed everywhere from Blair's expansion of the private finance initiative to Clinton's repeal of the Glass-Steagal Act , which had regulated the financial sector. For all his grace and touch, Barack Obama, who didn't possess a narrative either (except "hope"), was slowly reeled in by those who owned the means of persuasion.

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Facebook Twitter Pinterest -> What will be the first actions Trump takes as president?

As I warned in April, the result is first disempowerment then disenfranchisement. If the dominant ideology stops governments from changing social outcomes, they can no longer respond to the needs of the electorate. Politics becomes irrelevant to people's lives; debate is reduced to the jabber of a remote elite. The disenfranchised turn instead to a virulent anti-politics in which facts and arguments are replaced by slogans, symbols and sensation. The man who sank Hillary Clinton's bid for the presidency was not Donald Trump. It was her husband.

The paradoxical result is that the backlash against neoliberalism's crushing of political choice has elevated just the kind of man that Hayek worshipped. Trump, who has no coherent politics, is not a classic neoliberal. But he is the perfect representation of Hayek's "independent"; the beneficiary of inherited wealth, unconstrained by common morality, whose gross predilections strike a new path that others may follow. The neoliberal thinktankers are now swarming round this hollow man, this empty vessel waiting to be filled by those who know what they want. The likely result is the demolition of our remaining decencies, -> beginning with the agreement to limit global warming .

Those who tell the stories run the world. Politics has failed through a lack of competing narratives. The key task now is to tell a new story of what it is to be a human in the 21st century. It must be as appealing to some who have voted for Trump and Ukip as it is to the supporters of Clinton, Bernie Sanders or Jeremy Corbyn.

A few of us have been working on this, and can discern what may be the beginning of a story. It's too early to say much yet, but at its core is the recognition that – as modern psychology and neuroscience make abundantly clear – human beings, by comparison with any other animals, are both remarkably social and remarkably unselfish . The atomisation and self-interested behaviour neoliberalism promotes run counter to much of what comprises human nature.

Hayek told us who we are, and he was wrong. Our first step is to reclaim our humanity.

The stories you need to read, in one handy email Sign up to The Guardian Today and get the must-read stories delivered straight to your inbox each morning Read more

Hayek softened his opposition to monopolies and hardened his opposition to trade unions. He lambasted progressive taxation and attempts by the state to raise the general welfare of citizens. He insisted that there is "an overwhelming case against a free health service for all" and dismissed the conservation of natural resources. It should come as no surprise to those who follow such matters that he was awarded the Nobel prize for economics .

By the time Thatcher slammed his book on the table, a lively network of thinktanks, lobbyists and academics promoting Hayek's doctrines had been established on both sides of the Atlantic, abundantly financed by some of the world's richest people and businesses , including DuPont, General Electric, the Coors brewing company, Charles Koch, Richard Mellon Scaife, Lawrence Fertig, the William Volker Fund and the Earhart Foundation. Using psychology and linguistics to brilliant effect, the thinkers these people sponsored found the words and arguments required to turn Hayek's anthem to the elite into a plausible political programme.

[Feb 11, 2019] How the neoliberal dream became the reality of Thatcherism by Brendan Montague

Notable quotes:
"... Thatcher quickly assembled her team. She surprised almost everyone by making Geoffrey Howe, the IEA supporter and member of the Mont Pelerin Society, her chancellor and therefore putting him in charge of the country's economy. ..."
"... She then recruited a team of young, privately-educated free market thinkers to help her meet the terrifying prospect of confronting Harold Wilson - still a "cunning and attractive parliamentary performer" - in the House of Commons. ..."
"... Impact of Market Forces on Addictive Substances and Behaviours: The web of influence of addictive industries ..."
Feb 11, 2019 | theecologist.org

Heath's intention must have been to give Joseph a chemistry set with which he would hopefully blow himself up.

An excitable Keith Joseph met with Ralph Harris of the Institute of Economic Affairs and his deputy Arthur Seldon at one of his favourite Westminster restaurants, Lockets, in February 1974.

Joseph was at the time a member of the Shadow Cabinet and the third most influential politician in the Conservative party. He had invited his close friends from the IEA to lunch so he could get their clearance to set up a rival free market think tank.

His new Centre for Policy Studies would be overtly political and use the methods of the Socialist Fabians to win the battle of ideas in favour of radical liberalism within Britain's natural party of government.

This was cloak and dagger politics. An audacious, secret, plan to challenge seize the party leadership, win the forthcoming election and install a new Cabinet dedicated to making Hayek's economic prescriptions official policy for the first time. "My aim was to convert the Tory party," Joseph would later explain.

Joseph would become known even among his closest friends as the "Mad Monk" in part because of the purity and forcefulness of his political thought. He would concede that he was "a convenient madman".

Offer Encouragement

He had relied on Harris's instruction and help in economics and social policy, devouring the stack of books, reports and articles that the IEA recommended over the previous months.

"Harris assured Joseph that he was not troubled by the fact that there would be two organisations promoting roughly the same message. In fact Harris and Seldon could not have been more helpful," records Antony Fisher biographer Gerald Frost.

The CPS was in fact "the logical next step" in the battle against the State. Antony Fisher was just as welcoming of Joseph's bold move and paid a visit "to assure him of his personal support and to offer encouragement".

Joseph was the Marcus Brutus of his time, convinced that disloyally disposing of his leader, Edward Heath, would be good for his party, his city, his empire. He was the leader of this conspiracy.

Strangely considering his part in the internal leadership coup, Lawson would describe his friend Joseph as being: "Tormented by self-doubt, devoid of guile, and with a passion to educate, he laboured under the delusion that everyone else, friend or foe, was as intellectually honest and fundamentally decent, as lacking in malice and personal ambition, as he was."

Provoking Wrath

Heath was deeply suspicious that his colleagues were secretly plotting a leadership bid but gave his approval to the new think tank only half convinced it would study Polish economic policy. "Heath's intention must have been to give Joseph a chemistry set with which he would hopefully blow himself up," said one contemporary.

Joseph recruited Margaret Thatcher as vice chairman of the CPS in May 1974. "His was a risky, exposed position, and the fear of provoking the wrath of Ted and the derision of the left-wing commentators was a powerful disincentive - but I jumped at the chance," Thatcher recalled years later.

"From Keith and Alfred I learned a great deal. I renewed my reading of the seminal works of liberal economics and conservative thought.

"I also regularly attended lunches at the Institute of Economic affairs where Ralph Harris, Arthur Seldon, Alan Walters and others - in other words all those who had been right when we in government had gone wrong - were busy marking out a new non-socialist economic and social path for Britain."

Joseph prescribed Friedrich von Hayek's The Road to Serfdom as required reading. Gerald Frost, was a member of the CPSboard and would hand books and reports to Richard Ryder, Thatcher's political secretary, for her to read over the weekend including the latest output from the IEA.

"Joseph was also responsible for ensuring that Mrs Thatcher struck up relations with the IEA directors, and through them, Hayek and Friedman," recalls Frost.

The new Conservative think tank operated on an annual budget of £150,000 from private donors - which included the largess of the tobacco companies.

Hung Parliament

The official founding meeting of the CPS was held in Room G of the House of Commons on 12 June 1974. Joseph was joined by Thatcher and Sherman and also an industrialist named Nigel Vinson.

Vinson had written an article for the IEA and shortly after was called by Fisher and taken to lunch. Vinson was invited by Fisher to join the board of trustees of the IEA.

Vinson agreed because he "admired him hugely". Thirty years later he told me: "That's the link between the IEA and the Centre for Policy Studies: that's me. I, Maggie Thatcher and Keith Joseph, we were the first three directors of the Centre for Policy Studies."

The IEA, he explained, wanted to form opinions over decades and also protect the charitable status as educational rather than party political. The CPS, on the other hand, wanted to transform British politics in the next months and years.

Joseph went on a speaking tour while Britain was in tumult. Edward Heath had taken on the mining unions and lost.

The election in February had delivered a hung parliament and when negotiations between the Conservatives and Liberals collapsed, Labour formed a minority government. Harold Wilson and his Labour party won the second general election of the year, on 10 October 1974, but only by three votes.

"The result was much less of a disaster for the Tories than it might have been," according to Geoffrey Howe, who would later become chancellor under Thatcher. "We had lost, certainly. But disaster had been averted".

It was well understood that Heath would not last long as Tory leader. After the election he put Thatcher in charge of housing, and she in turn asked Nigel Lawson to join her clique.

Weathy Stockbroker

Lawson was born in Hampstead, now one of the most desirable parts of the capital, in March 1932. His father was a successful City of London tea merchant and his mother's father was a wealthy stockbroker.

His childhood home was "complete with nanny, cook and parlourmaid". Lawson during his formative years immediately after the war developed the distinctive distrust that would make him amenable to the free market philosophy.

"It seemed to me that in every respect the socialism the Labour Government was seeking to put into practice went against the grain of human nature - not least its Utopian disregard of original sin or of what Anthony Quinton has called 'man's moral and intellectual imperfection'."

Lawson won a maths scholarship and went up to Oxford University to study philosophy, politics and economics under the tutelage of professor Roy Harrod, an ardent Keynesian.

He specialised in philosophy and was influenced by the Linguistic Analysis school which would prove a useful foundation for his elegant rhetoric during his political career.

He joined Chatham, the "somewhat decadent high Tory dining club" and played poker. After university he joined the navy and in 1955 married Vanessa Salmon, a wealthy tobacco heiress. He then joined the Financial Times as an oil correspondent.

His son Dominic, currently a climate skeptic columnist, and his celebrity daughter Nigella, were both born during this period. Lawson then moved from the newsroom to the political backroom.

Oliver Poole, chairman of the FT and of the Conservative party, recognised his shrewdness and way with words hired him as a speechwriter to Harold MacMillan, the prime minister. Lawson would edit the right-wing Spectator and then the city pages of the newly launched Sunday Telegraph when in 1970 he stood unsuccessfully as an MP for Slough.

He was finally elected to Parliament on the eve of his 42nd birthday in 1974 and in the same year had a hand in drafting the Conservative party manifesto, committed the Tories to creating an ministry for energy and then found himself in Thatcher's policy group.

"This was my first experience of working with Margaret," Lawson would note. The proximity to Thatcher meant proximity to Joseph who at that time was the free market cabal's great hope for leadership.

Lawson recalled: "Keith was the founder member of the group of Tory radicals which, under Margaret's leadership, were the government's driving force during the first two Thatcher parliaments. The only other full members of that group were Geoffrey Howe, Norman Tebbit and myself."

Delinquents and Denizens

Howe made it clear that he wanted Joseph to join the leadership. "I [told] Joseph that he would have our support if he chose to stand, and no doubt others were doing the same. Keith seemed willing to accept the challenge."

But then disaster. Joseph would during the course of one speech wreck his leadership ambitions on the rocks of public good will and tolerance. "The balance of our population, our human stock is threatened", Joseph warned at Edgbaston in October 1974.

"A high and rising proportion of children are being born to mothers least fitted to bring children into the world and bring them up."

He continued: "Many of these girls are unmarried, many are deserted or divorced or soon will be. Some are of low intelligence, most of low educational attainment. They are producing problem children, the future unmarried mothers, delinquents, denizens of our borstals, sub-normal educational establishments, prisons, hostels for drifters!"

The blame for this apparent malaise was clear. "The Socialist method would take away from the family and its members the responsibilities which give it cohesion".

Almost before he had sat down after the address there was a storm of protest across the country. Many working class families were deeply offended and Joseph was "accused of being a racist and an advocate of eugenics".

The speech would in fact do for Joseph just as the "rivers of blood" had killed the political career of his close friend and fellow IEA advocate Enoch Powell years earlier. He was no longer a serious contender for the Conservative leadership and future prime minister.

"Keith, naive rather than deliberately provocative, was genuinely surprised by the fuss," according to Howe. "Sadly, I concluded that Keith's judgment was too erratic for him to be entrusted with leadership of the party." [Howe, 1994: 89].

Hostility to Women

Shortly after the speech a humbled Joseph called at Thatcher's offices at the Houses of Parliament. "I am sorry," he told his unofficial campaign leader. "I just can't run. Ever since I made that speech, the press has been outside the house. They have been merciless. My wife can't take it and I have decided I just can't stand."

The free market advocates had to decide what to do. They were deeply unhappy at the prospect that Heath and his national consensus would grind on for ever. Thatcher's ambitions were limited to that of chancellor, especially because of the hostility to women that dominated the Conservatives at that time. Her husband, Denis, had sold the family oil business to Castrol in the 1950s for what would today be many millions.

She was therefore comfortably off enough to risk everything. "Look, Keith, if you're not going to stand," she said finally. "I will." Thatcher's victory in the election for the Tory leadership was decisive. Two days later she met with the 1922 Committee of Conservative back bench MPs. "The room was packed," Howe recalls. "Tears came to my eyes. The Conservative Party had elected its first woman leader. By her almost reckless courage she had won their support, if not yet their hearts. A new bond of loyalty had been forged."

Thatcher quickly assembled her team. She surprised almost everyone by making Geoffrey Howe, the IEA supporter and member of the Mont Pelerin Society, her chancellor and therefore putting him in charge of the country's economy.

In doing so, she looked over Keith Joseph, although he remained at her side as a policy advisor. Howe concluded: "Keith Joseph was widely, and rightly, seen as the man who had blazed the trail for Margaret's victory."

She then recruited a team of young, privately-educated free market thinkers to help her meet the terrifying prospect of confronting Harold Wilson - still a "cunning and attractive parliamentary performer" - in the House of Commons.

The Gang of Four was led by Nigel Lawson.

Adam Curtis, the BBC filmmaker, captured the significance of this moment in the transformation of British political life. "She turned to the Institute of Economic Affairs to create the policies for a future government. What Fisher and Smedley had dreamt of twenty years before had finally happened.

"Once upon a time their Think Tank had been marginalised and despised - now it was at the centre of a counter-revolution that was about to triumph."

Brendan Montague is editor of The Ecologist, founder of Request Initiative and co-author of Impact of Market Forces on Addictive Substances and Behaviours: The web of influence of addictive industries (Oxford University Press) . He tweets at @EcoMontague. This article first appeared at Desmog.uk .

[Feb 11, 2019] Neoliberalism From the Left by Stephanie L. Mudge

Feb 11, 2019 | jacobinmag.com

An interview with
Stephanie L. Mudge

ince the late 1970s political parties all over the world have embraced a politics of free markets, privatization, and financialization. While promising freedom, this political project -- typically referred to as neoliberalism -- has brought record levels of economic inequality and significant democratic retrenchment, particularly in the advanced capitalist world.

Scholars often explain this shift by pointing to the victory of the New Right -- personified by figures like Ronald Reagan and Margaret Thatcher. But a new book by sociologist Stephanie Mudge tells a different story.

In Leftism Reinvented: Western Parties from Socialism to Neoliberalism , Mudge looks at left parties in advanced capitalist countries over the last century and shows how the experts aligned with those parties pushed them in the direction of spin doctors and markets. In the process, left parties' ability to represent the interests of their own working-class constituencies was eroded -- and ordinary people were shut out of the halls of power.

Political organizer and socialist activist Chase Burghgrave recently spoke with Mudge about her new book, the role of experts in democratic societies, and whether a more vibrant, egalitarian politics is possible.


CB You state at the beginning of your book that leftism actually went through two reinventions in the last century, first from socialist to Keynesian , and then from Keynesian to neoliberal . Why did you think it was important to analyze both of these reinventions within leftism? SM The short answer is that the second reinvention couldn't have happened without the first.

The longer answer is that socialism, Keynesianism (or what I call "economistic leftism"), and neoliberalism are not just political ideologies floating in the ether; they emerged out of certain institutional arrangements.

Economistic leftism was grounded in a strong, and historically novel, relationship between academic economics professions and left parties. This relationship was what made the Democratic Party "left," in a Keynesian sense, in the 1930s and 1940s. And this relationship was also key to the move from Keynesianism to neoliberalism -- after all, both systems of thought were primarily formulated inside economics professions.

Now, I hasten to add that neither economistic nor neoliberal leftism should be understood as left parties or politicians simply parroting the things economists say. But once left parties came to depend on economics, it did matter in a whole new way how economists saw things. CB You compared four political parties of the Left in your book: the British Labour Party, the German Social Democratic Party (SPD), the Swedish Social Democratic Party (SAP), and the US Democratic Party. Why did you think it was important to study leftism's trajectory through these four parties? And given that the Democratic Party was never a socialist party, why do you think the Democratic Party should be studied in an analysis of socialism's eventual transformation into neoliberalism? SM

I had pretty specific historical reasons for the parties I included in the book. For starters, I only wanted to deal with parties that were more or less continuous organizations for the whole twentieth century (this is a little complicated for the German SPD, which was banned in Nazi Germany, but in fact it did survive in exile during that time).

I also wanted to make sure that I included parties that have been especially influential internationally -- which varies across time periods. The German SPD was the first, and hands down the most powerful, mass party of the socialist left at its founding in 1875, so it had to be included if you wanted to understand the socialist period. The Swedish SAP then became the most successful social-democratic party in the West in the wartime and post–World War II periods and was very influential internationally for that reason. The British Labour Party, meanwhile, became very important when it came to power after World War II, and was a driver of the internationalization of "third way" politics in the 1990s.

The Democratic Party is trickier, because of its very different history. It has always been a mass party in a certain sense, but not a socialist or ideological one. I include it because, when the leading liberal or New Deal faction of the Democratic Party embraced Keynesianism around the time of the 1937 recession, it became somewhat comparable to social-democratic and labor parties. And, last but not least, in the 1990s the Democratic Party was a major exporter of "third way" politics to Europe and elsewhere. So that is why it needed to be part of the story. CB At the center of your analysis of leftism's reinventions are political parties and people you call "party experts." Why are party experts important for explaining the trajectory of Western leftism over the last century?

SM First, a definition is in order: I conceive of party experts very broadly, as the people in and around parties who make themselves valuable as strategists, speechwriters, and analysts -- that is, people who spend their time producing arguments about how things are and what parties and governments should do about it. The focus is on what people do, or the role they play, inside parties, regardless of their formal training, credentials, positions, or titles. So a party expert could be a consultant, journalist, economist, or politician, or anything else.

The reason party experts are important is that they shape what's on offer in democratic politics -- that is, what is political, or what it is possible to vote for . So, it matters a lot how party experts see things.

In the book I make the argument that party experts matter in a special way in left politics. Historically speaking, left parties play a very special role because they claim to be the best representatives of poor, disempowered, and disenfranchised groups -- that is, groups that lack time, money, connections, and other resources that facilitate full political participation. So left party experts articulate the interests of the least powerful in democratic politics. This is a very, very important responsibility. CB I was surprised reading your book to find that many of the party experts of early left parties came out of socialist associations, clubs, left newspapers, and journals. How was this background important for early party experts? SM Yes, this is sort of surprising, especially from a present-day perspective. Politics today is absolutely saturated with professionals -- consultants, strategists, think tank policy specialists, media talking heads. But it was not always thus. It's very clear that in the late 1800s and early 1900s, journalists and newspapermen were the most important party experts, especially on the Left. In the book I call these figures "party theoreticians," because they often wrote and edited for journals and newspapers that were party-supported, and so they depended on political parties to make a living.

Party theoreticians were important for a few reasons. First, if we go back far enough to recognize the tremendous importance of journalists in the production of socialist theory -- which describes many of the most important early socialist and Marxian intellectuals -- we have a very useful analytical starting point. We can trace their origins (how they became party experts) and what happened to them: why did they decline, such that we're now surprised to find such a figure at all? And, of course, we can ask whether the fact that party theoreticians were party-dependent journalists mattered for how they saw things.

They were also important because journalists changed the course of political history. It's not clear that Marxism specifically, or socialist theory more generally, could have become the basis of an enduring international discussion without them. Marx himself was academically trained, but much of his writing was done as a journalist . Some argue that the camaraderie, collaboration, cross-criticism, and political engagement that characterized life as a journalist in the mid to late 1800s directly informed the socialist and Marxian imaginary. So if we agree that socialist theory has been one of the most important lines of thinking in modern history, then we should also agree that party-dependent and party-affiliated journalists are among history's most important intellectual figures.

There is one more reason the party theoretician is important, which bears on politics today. The fact that journalists' past influence is surprising to us now shows that perceptions of "experts" or "expertise" are both historically variable and politically determined. There is a lesson in this: contemporary political parties have a special capacity to consecrate (in a sense, to make ) experts, regardless of what kind of credentials, schooling, skills, or professional positions people have. They can valorize certain types of skills, forms of knowledge, and modes of communicating; they can also, of course, exclude or marginalize.

Left parties should take this capacity more seriously. There are too many wonks, strategists, and talking heads, and too few people who don't have fancy credentials but do have firsthand knowledge of suffering in their communities, featured in today's political debates. Maybe if left parties took their capacity to make experts more seriously, they could cultivate a more inclusive and representative politics. CB How did this relationship between left political parties and the economics discipline form, and what were its effects? SM In the book I argue that a new "interdependence" between mainstream economics professions and left parties formed during the Great Depression and the wartime period. There were a few reasons this happened.

One is that everyone agreed that there were big economic problems, but economic facts were matters of dispute (remember that this period predates widely available, standardized economic statistics). So there was a great deal of political demand for people who could pinpoint, for instance, the scale and causes of unemployment.

Another cause was located in economics: economics professions (which were then much smaller, and still in the making) attracted lots of new students who were interested in problems of poverty, labor relations, income distribution, and unemployment, but those students often found that economics professors wouldn't (or couldn't) speak to those concerns. This kicked off a sort of generational rebellion, and new kinds of economists were born (there are similar things happening now, by the way).

Third, in Western Europe, left parties were becoming established enough to invest in recruiting a younger, college-educated generation of leadership. In the Democratic Party, this kind of recruitment began via FDR's campaign (in the making of the famed " Brain Trust ").

So, in sum, in the 1920s and 1930s, a new generation of technically adept economists who spoke to left political concerns were in the making, even as left parties formed closer ties with universities and economics professions.

The effects, I think, were tremendous. In a sense, interdependence made "Keynesianism" mainstream -- that is, it helped Keynesian economics become orthodoxy. Interdependence also underpinned left parties' ability to form coalitions, win elections, and govern postwar economies. Last but not least, interdependence created a sort of backdoor into influencing left politics -- through economics professions, rather than through parties.

CB The party experts that came to replace socialist party theoreticians had what you refer to as a "Keynesian ethics." What are "Keynesian ethics," and where did they come from? SM "Keynesian ethics" refer to the way left parties' dominant economic experts in the 1960s -- people I call "economist theoreticians" -- saw economists, politics, and the relationship between the two. The hallmark of the Keynesian ethic was an assumption that the economist's job was to provide strategically useful analysis and advice -- that is, advice that helped left parties hold together coalitions, deal with the demands of organized labor, facilitate negotiation, support redistributive and welfarist policies, and appeal to broader publics. In other words, "good" economic advice was also politically useful .

The sociological argument here is that the Keynesian ethic was linked to economist theoreticians' situation: they had one foot in left parties and the other in the economics profession. In other words, Keynesian ethics expressed economists' very real experience of being prominent economists and also political strategists, advisers, or government appointees. For people who had this experience, Keynesian ethics were common sense. CB Keynesian economist theoreticians were displaced within the left political parties when Keynesian economics as a discipline went into crisis in the 1970s. Why did this happen, and what kind of party expert replaced them? SM The standard answer is that "stagflation" -- increasing rates of both unemployment and inflation in the 1960s and 1970s -- killed Keynesianism, because it confirmed monetarist arguments (in particular, Milton Friedman's). So stagflation was proof that Keynesianism was a faulty science, and Keynesian economists were faulty scientists.

But the actual history is much more complicated. Economic events are real -- if gas prices are suddenly really high, that's pretty clear to everyone -- but interpreting what those events mean is a whole different thing. People do the interpretation, and people always have investments. In the book I point out that the stagflation-killed-Keynesianism narrative was produced by people with investments -- sometimes political, sometimes professional, and sometimes both.

The stagflation critique was political, not just scientific. And, among economists, those who declared Keynesian economics dead in the 1970s were academics, financial economists, international economists, and sometimes conservative or center-right-party-affiliated economists -- they were, in other words, not left-party-affiliated economist theoreticians. So the stagflation-killed-Keynesianism narrative also had a professional aspect to it -- that is, it was partly an "ivory tower" critique of economists who were too politically involved, and therefore not scientific enough. And that critique clearly won, which fundamentally changed the economics profession by killing Keynesian ethics.

So, what comes next -- to whom did left parties turn? They turned to new kinds of economists, who saw the world, and their role in politics, in a very different way. In the book I call these new kinds of economists "TFEs" (which stands for Transnational, Finance-oriented Economists). I argue that TFEs were not "neoliberals," but they had what we might call "neoliberal ethics": they saw their responsibilities in terms of expanding and sustaining markets (a term that is sometimes code for specifically financial markets), even if this worked directly against the interests of left constituencies -- and, by extension, left parties. CB Do you think the growth of neoliberalism is better explained by left parties' acceptance of neoliberalism than the political victory of the Right? SM

Yes. Right parties have never pretended to be representatives of the disempowered or advocates of policies that insulate people from market forces. The Right's embrace of free markets in the 1980s was important, but it was not surprising. And I think it's disputable that this was really a popular move, electorally speaking -- this was a period of growing political alienation and declining turnout across the board. In this context, left parties were the only political force that was capable of critically engaging with market logic. But they did the opposite of this in the 1990s.

I think this had electoral and cultural consequences. Electorally, the "losers" of "globalization" -- that is, a whole lot of people, including whole communities -- ended up with no party that spoke for them. Culturally, criticism of the neoliberal order was marginalized and hived off as a province of the "radical" left, rather than being the stuff of mainstream political discourse -- where it should have been all along. CB You write that the growth of transnationalized, finance-oriented economists (TFEs) and left party political strategists and policy wonks are actually related. Why is that?

SM

TFEs were left party advisers who took it for granted that markets were forces "out there." They specialized in how to keep markets happy and reasoned that market-driven growth was good for everyone. But all of this was built on half-truths. First: markets, especially of the financial sort, become forces "out there" if humans construct them, insulate them from public or government oversight, and prop them up when they fail. Left parties in government in the late 1990s and early 2000s, with the input of TFEs, did exactly this. Second: what's good for markets is not necessarily good for families, communities, young people, older people, wage-earners, or victims of discrimination -- among others. This is especially true if by "markets" we really mean financial markets. Recent history is proof enough on both of these points.

So what do left parties do if they no longer have a way of responding to their constituencies' economic concerns, but they still want to win elections? They turn to spin: that is, they try to build appeal by marketing rather than substance. This is a sort of functional argument in the book: TFEs represented markets instead of constituents, and created a new need for strategic expertise. But it wasn't enough, and left political coalitions disintegrated. CB What have been the electoral consequences of TFEs and strategists, of this new generation of party experts in left parties? SM

In short: disastrous. Left politics has to speak for actual people, not a fictional ideal-type "mainstream" or "median" voter. Left parties' turn to markets, spin, and strategy is a symptom of a failure of meaningful representation. Voters know the difference between marketing and substance: sooner or later people see the game for what it is, and they lose faith. I think recent history is proof enough on this, too. CB You seem to indicate in your book's conclusion that what Western left parties need are a new generation of party experts capable of giving voice to the voiceless and acting as intermediaries between parties of the Left and those they are supposed to represent. What kind of party expert do you hope replaces TFEs, political strategists, and policy wonks? SM

This is the big question, isn't it? The short answer is that left politics needs experts who make spin unnecessary. Left politics should have intuitive appeal because it speaks to people's real needs and concerns.

That said, I don't think new experts will magically cure the ills of left politics. Nor is it my place to say who the next left party experts should be. I think that party experts can be anyone -- and maybe, in the current moment, left parties should be dedicating their resources to playing the long game by radically broadening the profiles of the people we consider "experts."

But I will say this: it is absolutely essential that left parties cultivate people's ability to understand, and critically engage with, the structure and logic of contemporary financial capitalism. I think Alexis de Tocqueville once said that you have to "educate democracy." I would give this a Marxian twist: you have to educate capitalist democracy. There can be no left politics without a shared understanding of today's specific economic circumstances, which are not like the circumstances of the 1930s or the 1970s. We live in a complicated world that is dominated by finance and holders of financial wealth, and this world needs to be unmasked.

And, to be honest, I'm skeptical that the contemporary economics professions can lead the way here, because they operate "on high" -- they speak a highly specialized language that is designed to be exclusive, not inclusive; they are constrained in the kinds of questions they can ask and the techniques they can use to answer them. So, maybe I should modify my previous statement: left parties should be dedicating their resources to cultivating critical economic analysis and radically broadening the profiles of the people we consider "economists." About the Author

Stephanie L. Mudge is an associate professor of sociology at the University of California, Davis and the author of Leftism Reinvented: Western Parties from Socialism to Neoliberalism .

[Jan 21, 2019] How neoliberalism manufactured consent to secure its unlimited power

Dec 23, 2018 | failedevolution.blogspot.com
From David Harvey's A Brief History of Neoliberalism

Part 10 – How Margaret Thatcher systematically destroyed the British industry along with the trade unions

While there were many elements out of which consent for a neoliberal turn could be constructed, the Thatcher phenomenon would surely not have arisen, let alone succeeded, if it had not been for the serious crisis of capital accumulation during the 1970s. Stagflation was hurting everyone. In 1975 inflation surged to 26 per cent and unemployment topped one million. The nationalized industries were draining resources from the Treasury.

This set up a confrontation between the state and the unions. In 1972, and then again in 1974, the British miners (a nationalized industry) went on strike for the first time since 1926.

The miners had always been in the forefront of British labour struggles. Their wages were not keeping pace with accelerating inflation, and the public sympathized. The Conservative government, in the midst of power blackouts, declared a state of emergency, mandated a three-day working week, and sought public backing against the miners. In 1974 it called an election seeking public support for its stand. It lost, and the Labour government that returned to power settled the strike on terms favourable to the miners.

The victory was, however, pyrrhic. The Labour government could not afford the terms of the settlement and its fiscal difficulties mounted. A balance of payments crisis paralleled huge budget deficits. Turning for credits to the IMF in 1975–6, it faced the choice of either submitting to IMF-mandated budgetary restraint and austerity or declaring bankruptcy and sacrificing the integrity of sterling, thus mortally wounding financial interests in the City of London. It chose the former path, and draconian budgetary cutbacks in welfare state expenditures were implemented . The Labour government went against the material interests of its traditional supporters. But it still had no solution to the crises of accumulation and stagflation. It sought, unsuccessfully, to mask the difficulties by appealing to corporatist ideals, in which everyone was supposed to sacrifice something for the benefit of the polity.

Its supporters were in open revolt, and public sector workers initiated a series of crippling strikes in the ' winter of discontent ' of 1978. ' Hospital workers went out, and medical care had to be severely rationed. Striking gravediggers refused to bury the dead. The truck drivers were on strike too. Only shop stewards had the right to let trucks bearing "essential supplies" cross picket lines. British Rail put out a terse notice "There are no trains today" . . . striking unions seemed about to bring the whole nation to a halt. '

The mainstream press was in full cry against greedy and disruptive unions, and public support fell away. The Labour government fell, and in the election that followed Margaret Thatcher won a significant majority with a clear mandate from her middle-class supporters to tame public sector trade union power .

The commonality between the US and the UK cases most obviously lies in the fields of labour relations and the fight against inflation. With respect to the latter, Thatcher made monetarism and strict budgetary control the order of the day. High interest rates meant high unemployment (averaging more than 10 per cent in 1979–84, and the Trades Union Congress lost 17 per cent of its membership in five years ). The bargaining power of labour was weakened.

Alan Budd, an economic adviser to Thatcher, later suggested that ' the 1980s policies of attacking inflation by squeezing the economy and public spending were a cover to bash the workers ' . Britain created what Marx called ' an industrial reserve army ', he went on to observe, the effect of which was to undermine the power of labour and permit capitalists to make easy profits thereafter. And in an action that paralleled Reagan's provocation of PATCO in 1981, Thatcher provoked a miners' strike in 1984 by announcing a wave of redundancies and pit closures (imported coal was cheaper).

The strike lasted for almost a year, and, in spite of a great deal of public sympathy and support, the miners lost. The back of a core element of the British labour movement had been broken. Thatcher further reduced union power by opening up the UK to foreign competition and foreign investment. Foreign competition demolished much of traditional British industry in the 1980s –– the steel industry (Sheffield) and shipbuilding (Glasgow) more or less totally disappeared within a few years, and with them a good deal of trade union power.

Thatcher effectively destroyed the indigenous nationalized UK automobile industry, with its strong unions and militant labour traditions, instead offering the UK as an offshore platform for Japanese automobile companies seeking access to Europe. These built on greenfield sites and recruited non-union workers who would submit to Japanese-style labour relations.

The overall effect was to transform the UK into a country of relatively low wages and a largely compliant labour force (relative to the rest of Europe) within ten years. By the time Thatcher left office, strike activity had fallen to one-tenth of its former levels. She had eradicated inflation, curbed union power, tamed the labour force, and built middle-class consent for her policies in the process .

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[Dec 30, 2018] Neoliberalism, the Free Market, and the Decline of Managerial Capitalism - The European Financial Review - Empowering communications globally

Notable quotes:
"... By Alexander Styhre ..."
"... Management and Neoliberalism: Connecting Policies and Practices ..."
"... Scandinavian Journal of Management. ..."
Dec 30, 2018 | www.europeanfinancialreview.com

Neoliberalism, the Free Market, and the Decline of Managerial Capitalism

April 23, 2014 • EUROPE , WORLD , Economic Thoughts , Commentary , Business & Economy , Politics & Policy , Eurozone Crisis & Debate

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By Alexander Styhre

Neoliberalism is a most troubled term, one that denotes a variety of ideologies, beliefs, policies and practices. This article outlines some of the changes concerning corporate governance, managerial control, and employee relations and points at the interrelations between the scholarly debates and theoretical contributions, macroeconomic conditions, and political agenda all being part of the century-long history of neoliberalism.

The roots of neoliberalism runs deep in Western thinking and the history of the term is more complex than is generally recognized, especially among those who associate the term with laissez-faire policies and what at times has been rejected as "market fundamentalism." Liberalism as a political and economic term is of British origin, but the neoliberal tradition of thinking derives from the continent, and from Austria and Germany in particular. 1 The Austrian School of Economics, represented by Friedrich von Hayek and Joseph Schumpeter and the so-called Ordo-liberals at Freiburg University in Germany represent two distinct branches of economic liberalism. While Hayek early on warned against an expanded role of the state as the central planner of economic activities, the German group of liberal economists was more ready to recognize the role of the state as the legitimate regulator of the economy.

Hayek was a peripheral figure in the economic profession in the interwar period, but the anti-Keynesian sentiments at London School of Economics, best represented by the economist Lionel Robbins, served to advance Hayek as an alternative to the widely endorsed Keynesian economic theory and its application in policy. In 1950, Hayek was offered a position at LSE on the basis of a private donation. A few years earlier, in 1947, Hayek had founded the Mont Pèlerin Society (MPS), a community of intellectuals including economists such as Frank Knight, Milton Friedman, and Lionel Robbins and the philosopher Karl Popper. This group was committed to advancing a liberal economic agenda and to counteracting collectivist solutions to economic problems. For more than two decades, MPS was operating out of the limelight as Keynesianism effectively enabled economic growth and handled the issue of the distribution of economic resources through the use of progressive taxation in the emerging welfare states. In both economics departments and in policy-making quarters, Keynesianism became highly influential, at times hegemonic. However, by the mid-1960s, the profit rates started to decline in American industry and during the first oil crisis in the 1970s, caused by political conflicts, industry's profit rates sharply declined as energy costs soared.

Liberalism as a political and economic term is of British origin, but the neoliberal tradition of thinking derives from the continent, and from Austria and Germany in particular

The remainder of the 1970s were characterized by the new phenomenon of stagflation , high inflation in combination with rising unemployment, and the new monetarist economic theory advocated by Milton Freidman proposed a high interest-rate policy to curb inflation and to promote economic growth. Paul Volcker, the new chairman of the Federal Reserve named by President Carter, announced a high interest rate policy that would last well into the 1980s. By the mid-1970s, the predominant Keynesianist economic policy came under attack and neoliberal intellectuals could advance their positions.

The triumph of neoliberalism in the 1980s was caused by both macroeconomic and political changes in American society. First, the combination of high overseas savings, primarily in Japan reporting significant trade surplus, an overrated dollar, and the high-interests policy of the Fed led to an inflow of capital into the American economy, creating an oversupply of capital in the 1980s. 2 In addition, Ronald Reagan was elected president in 1980 on the basis of a pro-business agenda, and the Reagan Administration recruited economic advisors and co-workers from neoliberal and neoconservative think tanks that were either formed. or significantly increased their budgets, in the 1970s, as private capital owners donated money to advance free market policies. The new administration wanted to promote economic growth by implementing new regulatory policies based on the idea of the virtues of "small governments" as prescribed by Hayek's work published during the war years and thereafter. One of the key targets in this neoliberal framework were the trade unions, which were widely regarded as representing a collectivist solution that poorly fitted with the free-market policy advocated by neoliberal intellectuals. In addition, substantial tax reforms in the 1980s were justified on the basis of what was branded "trickle-down economics" by its critics, the idea that reduced taxes would create their own economic momentum as the supply of capital would "trickle down" the economic system and generate economic growth through increased demand.

By the mid-1980s, a wave of hostile takeovers strongly contributed to the decline in managerial capitalism, the economic regime characterized by large, public corporations run by professional managers representing various functional domains of expertise, and promoted a shift to "investor capitalism.

The tax-reforms reduced the federal income but the inflow of foreign capital into the American economy enabled the Reagan Administration to eat the cake and have it too: while Reagan was fond of speaking of "rolling back the state," he had larger budget deficits than any other post-World War II president, and government bonds served to finance the sharp increase in military spending in the 1980s. In fact, the issuing of government bonds closely followed the budget deficits in the Reagan era. 3


Investor capitalism

The new economic advisors, equipped with the new finance theory, advocated a liberalization of regulatory frameworks enabling new financial operations. By the mid-1980s, a wave of so-called hostile takeovers strongly contributed to the decline in managerial capitalism, the economic regime characterized by large, public corporations run by professional managers representing various functional domains of expertise, and promoted a shift to "investor capitalism," an economic regime closely bound up with the emergence of an increasingly dominant finance industry. As the American economy overflowed with capital, there were opportunities for a new class of professional finance professionals to raise capital, to buy large conglomerate firms being underrated after 1970s bear markets, and to divest them. Permissive regulators endorsed economic theories that regarded hostile takeovers as a legitimate mechanism serving to eliminate poorly managed firms with low-growth opportunities and therefore playing a key role in renewing and invigorating the economy. Such theoretically logical arguments were, however, not supported by empirical evidence as it was primarily sound and well-functioning companies that were subject to hostile takeover bids. 4

Regardless of the legitimacy of the new forms of financial engineering, strongly dependent on the ability to issue junk bonds popular among the new generation of finance industry actors such as Michael Milken, the new threat to corporate survival made CEOs and directors aware of the need to pay close attention to the market valuation of the stock. The popularity of agency theory and its insistence on the creation of shareholder value as the sole legitimate objective of the corporation further underlined the firm's orientation towards the finance market. In the new political and regulatory environment of the 1980s, the focus shifted from long-term survival and economic stability, i.e., virtues of managerial capitalism, to short-term capital accumulation and the ability to live with the turmoil of the ups and downs of the economy. Managers had traditionally been paid to secure long-term and stable growth and to cater to a variety of constituencies, while in the new economic regime, that of investor capitalism, high returns on investment and the one-sided focus of shareholder enrichment were rewarded. Managers started to "think like shareholders."

The popularity of agency theory and its insistence on the creation of shareholder value as the sole legitimate objective of the corporation further underlined the firm's orientation towards the finance market.

The inflow of capital into the U.S. economy had also created a new form of finance industry actor, the fund manager. While fund managers controlled 20% of shares of a stock-listed company in 1970, in 2005, the comparable figure was 60%. 5 In the ideal case of market-based transactions, an investor being unsatisfied with the financial performance of the firm acts through exit rather than voice (in Albert Hirschman's terms), i.e., he or she sells the stock. In the case where one single actor holds large shares of the stock, the selling of the shares would affect the market price, and therefore fund managers started to influence how CEOs and directors were recruited to the firms in which they held stocks, that is, they increasingly turned to voice rather than exit . As a consequence, CEOs and the directors with a background in finance that shared a belief in finance market efficiency and the virtue of shareholder value creation were increasingly recruited. As both fund managers and CEOs were now compensated on the basis of their ability to report a growth in the value of the stock, the interests of CEOs, directors, and owners converged as they were now all serving the same finance market. In an agency theory view, this led to a reduction of the so-called agency costs. Unfortunately, there was evidence of new forms of behavior that were not anticipated by free-market protagonists.

187890299-1

If markets were efficient, why would firms invest their so-called "free cash flow" to manipulate the price of their stock rather than investing the money in productive capital, or transfer the capital to the owners as dividends?

For instance, in the period of 1987-2007, the amount of annual repurchases of stocks by individual firms increased eighteen-fold. 6 Agency theory makes the assumption that finance markets are effectively pricing assets, that is, all publically available information is reflected in a financial asset's market price. Yet, the de-regulation of the finance markets from the 1980s to promote market efficiency coincides with a strong preference of firms to repurchase their own stock. If markets were efficient, why would then firms invest their so-called "free cash flow" to manipulate the price of their stock rather than investing the money in productive capital, or transfer the capital to the owners as dividends? The literature on stock repurchases offers a number of explanations but fails to provide a unified and comprehensive view. 7 Under all conditions, stock repurchases remain a puzzling phenomenon for free-marketeers.

In the new regime of investor capitalism, dominated by neoclassic economic theory favouring market transactions and skeptical of the role of organizations altogether (as they to some extent represent a market failure in terms of offering lower transaction costs vis-à-vis comparable market transactions), managerial authority has been moved to the outside of the corporation. First of all, to repeat, the shareholder value creation policy locates the shareholders who know better than executives inside the firm where to invest the free-cash flow; if there are promising potentials within the focal firm, capital owners will buy more shares, but if there are higher expected returns elsewhere, the capital will be invested accordingly. Second, as a consequence of the suspicion that executives are at risk to act opportunistically, various forms of auditing, accreditations, and credit ratings are widely used in an attempt to move the corporate control outside of the firm. The extensive literature on auditing and the issuing of accreditations and credit ratings unfortunately reveal that it is complicated to maintain the arm's-length distance needed between the auditor and the auditee, 8 and in the case of credit-rating, the so-called "issuer pays" policy leads to a series of governance problems. 9

Third, the orientation towards finance markets and its emphasis on high returns over long–term stability -- there is ample evidence of a sharp growth of recurrent financial crises after 1980 10 -- has led to new human resources and employment practices, wherein a larger proportion of the workforce is hired on short-term contracts and receive lower pay and fewer benefits. In addition, in the U.S., and the U.K., the two epicentra of neoliberal reforms, the level of unionization has been in decline, further reducing the collective bargaining power of workers. 11 The perhaps largest explanatory factor regarding the decline in long-term stability in employment is the loss in manufacturing jobs in the U.S., and the succession of service-industry jobs offering both lower pay and lower demands for technical expertise. In addition, in the attempt to boost shareholder value, downsizing and off-shoring have been popular among finance market-oriented executives. By and large, the shift from the managerial capitalism of the Keynesian, post-World War II period to the neoliberal investor capitalism brought a new theory of the firm, novel corporate governance practices, an accentuated short-term perspective on economic value creation, and not least, a new vocabulary of how to address and speak about managerial practices and firm performance.

The triumph of free-market thinking and neoliberal policy is perhaps not so much to be treated as the ultimate evidence of the superior rationality of the market, as it is indicative of the decline of the U.S. and U.K. economies and the West more broadly speaking on the global scale.
Concluding Remarks

In hindsight, after five decades of consolidation and organization, free-market protagonists managed to move from the periphery of economic policy-making and into its very centres by the end of the 1970s. Those who were initially regarded as outsiders and eccentrics started to claim the Nobel Memorial Prizes in Economic Sciences by the mid-1970s, but this is, skeptics may say, not so much about "being right" (in terms of making adequate predictions or providing policies that regulate the economy effectively) as much as it is indicative of the ability to capitalize on strong political and economic interests being mobilized when, for example, trade unions' influence and demands for economic equality were regarded to be too far advanced by certain groups. In addition to the ability to align capital owners and intellectuals in financing academic departments and think tanks in the post-World War II period and in the crisis-ridden 1970s in particular, 12 macroeconomic conditions were beneficial for the free-market cause. At the same time, it is complicated to predict the outcome from policy-making, and there are significant influences from unforeseen events and unanticipated consequences of purposeful action in the history of neoliberalism and free market reforms. Therefore, the triumph of free-market thinking and neoliberal policy is perhaps not so much to be treated as the ultimate evidence of the superior rationality of the market as economists like Friedrich von Hayek and Milton Friedman would assume, as it is indicative of the decline of the U.S. and U.K. economies and the West more broadly speaking on the global scale as suggested by economic statistics. 13

While finance theory professors are fond of speaking of finance markets as being "the brain of capitalist system," the events of 2008 rendered such statements subject to doubt, to say the least.

The enormous growth of financial markets and the finance industry is also a topic subject to much scholarly and media attention, and while finance theory professors are fond of speaking of finance markets as being "the brain of capitalist system," the events of 2008 rendered such statements subject to doubt, to say the least. In addition, the free-market capitalism being dreamed about by neoliberal intellectuals since the 1930s does by no means imply a diminished state but rather the government and state agencies becoming an ally of capital owners, serving to rearticulate the welfare state into a "neoliberal ownership society state." Whether that is a sustainable role of the state, or if it rewards certain groups at an intolerable level is subject to ongoing discussions.

This article draw on A. Styhre (2014) Management and Neoliberalism: Connecting Policies and Practices (New York & London: Routledge)

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About the Author

Alexander Styhre , Ph.D (Lund University) is Chair of Organization Theory and Management, School of Business, Economics and Law, University of Gothenburg, Sweden. Styhre has published widely in the field of organization studies and is the author of several research monographs and textbooks. Alexander is the Editor-in-Chief of Scandinavian Journal of Management.

[Dec 29, 2018] How neoliberalism manufactured consent to secure its unlimited power

Dec 29, 2018 | failedevolution.blogspot.com

From David Harvey's A Brief History of Neoliberalism
Part 11 – The Reagan/Thatcher neoliberal legacy: a bizarre form of a sinister political doctrine from which it would be difficult one to escape
But Thatcher had to fight the battle on other fronts. A noble rearguard action against neoliberal policies was mounted in many a municipality –– Sheffield, the Greater London Council (which Thatcher had to abolish in order to achieve her broader goals in the 1980s), and Liverpool (where half the local councillors had to be gaoled) formed active centres of resistance in which the ideals of a new municipal socialism (incorporating many of the new social movements in the London case) were both pursued and acted upon until they were finally crushed in the mid-1980s.
She began by savagely cutting back central government funding to the municipalities, but several of them responded simply by raising property taxes, forcing her to legislate against their right to do so. Denigrating the progressive labour councils as 'loony lefties' (a phrase the Conservative-dominated press picked up with relish), she then sought to impose neoliberal principles through a reform of municipal finance. She proposed a 'poll tax' –– a regressive head tax rather than a property tax –– which would rein in municipal expenditures by making every resident pay. This provoked a huge political fight that played a role in Thatcher's political demise .
Thatcher also set out to privatize all those sectors of the economy that were in public ownership. The sales would boost the public treasury and rid the government of burdensome future obligations towards losing enterprises. These state-run enterprises had to be adequately prepared for privatization, and this meant paring down their debt and improving their efficiency and cost structures, often through shedding labour.
Their valuation was also structured to offer considerable incentives to private capital –– a process that was likened by opponents to 'giving away the family silver'. In several cases subsidies were hidden in the mode of valuation –– water companies, railways, and even state-run enterprises in the automobile and steel industries held high-value land in prime locations that was excluded from the valuation of the enterprise as an ongoing concern.
Privatization and speculative gains on the property released went hand in hand. But the aim here was also to change the political culture by extending the field of personal and corporate responsibility and encouraging greater efficiency, individual/corporate initiative, and innovation. British Aerospace, British Telecom, British Airways, steel, electricity and gas, oil, coal, water, bus services, railways, and a host of smaller state enterprises were sold off in a massive wave of privatizations.
Britain pioneered the way in showing how to do this in a reasonably orderly and, for capital, profitable way. Thatcher was convinced that once these changes had been made they would become irreversible: hence the haste. The legitimacy of this whole movement was successfully underpinned, however, by the extensive selling off of public housing to tenants. This vastly increased the number of homeowners within a decade. It satisfied traditional ideals of individual property ownership as a working-class dream and introduced a new, and often speculative, dynamism into the housing market that was much appreciated by the middle classes, who saw their asset values rise –– at least until the property crash of the early 1990s .
Dismantling the welfare state was, however, quite another thing. Taking on areas such as education, health care, social services, the universities, the state bureaucracy, and the judiciary proved difficult. Here she had to do battle with the entrenched and sometimes traditional upper-middle-class attitudes of her core supporters .
Thatcher desperately sought to extend the ideal of personal responsibility (for example through the privatization of health care) across the board and cut back on state obligations. She failed to make rapid headway. There were, in the view of the British public, limits to the neoliberalization of everything. Not until 2003, for example, did a Labour government, against widespread opposition, succeed in introducing a fee-paying structure into British higher education .
In all these areas it proved difficult to forge an alliance of consent for radical change. On this her Cabinet (and her supporters) were notoriously divided (between 'wets' and 'drys') and it took several years of bruising confrontations within her own party and in the media to win modest neoliberal reforms. The best she could do was to try to force a culture of entrepreneurialism and impose strict rules of surveillance, financial accountability, and productivity on to institutions, such as universities, that were ill suited to them.
Thatcher forged consent through the cultivation of a middle class that relished the joys of home ownership, private property, individualism, and the liberation of entrepreneurial opportunities. With working-class solidarities waning under pressure and job structures radically changing through deindustrialization, middle-class values spread more widely to encompass many of those who had once had a firm working-class identity .
The opening of Britain to freer trade allowed a consumer culture to flourish, and the proliferation of financial institutions brought more and more of a debt culture into the centre of a formerly staid British life. Neoliberalism entailed the transformation of the older British class structure, at both ends of the spectrum.
Moreover, by keeping the City of London as a central player in global finance it increasingly turned the heartland of Britain's economy, London and the south-east, into a dynamic centre of ever-increasing wealth and power. Class power had not so much been restored to any traditional sector but rather had gathered expansively around one of the key global centres of financial operations. Recruits from Oxbridge flooded into London as bond and currency traders, rapidly amassing wealth and power and turning London into one of the most expensive cities in the world.
While the Thatcher revolution was prepared by the organization of consent within the traditional middle classes who bore her to three electoral victories, the whole programme, particularly in her first administration, was far more ideologically driven (thanks largely to Keith Joseph) by neoliberal theory than was ever the case in the US. While from a solid middle-class background herself, she plainly relished the traditionally close contacts between the prime minister's office and the 'captains' of industry and finance. She frequently turned to them for advice and in some instances clearly delivered them favours by undervaluing state assets set for privatization . The project to restore class power –– as opposed to dismantling working-class power –– probably played a more subconscious role in her political evolution.
The success of Reagan and Thatcher can be measured in various ways. But I think it most useful to stress the way in which they took what had hitherto been minority political, ideological, and intellectual positions and made them mainstream. The alliance of forces they helped consolidate and the majorities they led became a legacy that a subsequent generation of political leaders found hard to dislodge.
Perhaps the greatest testimony to their success lies in the fact that both Clinton and Blair found themselves in a situation where their room for manoeuvre was so limited that they could not help but sustain the process of restoration of class power even against their own better instincts. And once neoliberalism became that deeply entrenched in the English-speaking world it was hard to gainsay its considerable relevance to how capitalism in general was working internationally.
This is not to say, as we shall see, that neoliberalism was merely imposed elsewhere by Anglo-American influence and power. For as these two case studies amply demonstrate, the internal circumstances and subsequent nature of the neoliberal turn were quite different in Britain and the US, and by extension we should expect that internal forces as well as external influences and impositions have played a distinctive role elsewhere.
Reagan and Thatcher seized on the clues they had (from Chile and New York City) and placed themselves at the head of a class movement that was determined to restore its power. Their genius was to create a legacy and a tradition that tangled subsequent politicians in a web of constraints from which they could not easily escape . Those who followed, like Clinton and Blair, could do little more than continue the good work of neoliberalization, whether they liked it or not.

[Dec 09, 2018] Meet the Economist Behind the One Percent's Stealth Takeover of America

Not knowing about his role is a dangerous blind spot. Please real MacLean brilliant book, Democracy in Chains, a finalist for the National Book Award in Nonfiction.
Dec 09, 2018 | www.ineteconomics.org

[Nov 27, 2018] American capitalism could afford to make concessions assiciated with The New Deal because of its economic dominance. The past forty years have been characterized by the continued decline of American capitalism on a world stage relative to its major rivals. The ruling class has responded to this crisis with a neoliberal counterrevolution to claw back all gains won by workers. This policy has been carried out under both Democratic and Republican administrations and with the assistance of the trade unions.

Highly recommended!
Notable quotes:
"... The original "New Deal," which included massive public works infrastructure projects, was introduced by Democratic President Franklin Roosevelt in the 1930s amid the Great Depression. Its purpose was to stave off a socialist revolution in America. It was a response to a militant upsurge of strikes and violent class battles, led by socialists who were inspired by the 1917 Russian Revolution ..."
"... Since the 2008 crash, first under Bush and Obama, and now Trump, the ruling elites have pursued a single-minded policy of enriching the wealthy, through free credit, corporate bailouts and tax cuts, while slashing spending on social services. ..."
"... To claim as does Ocasio-Cortez that American capitalism can provide a new "New Deal," of a green or any other variety, is to pfile:///F:/Private_html/Skeptics/Political_skeptic/Neoliberalism/Historyromote an obvious political fiction." ..."
Nov 27, 2018 | thenewkremlinstooge.wordpress.com

Northern Star November 26, 2018 at 4:23 pm

As the New deal unravels:

"The original "New Deal," which included massive public works infrastructure projects, was introduced by Democratic President Franklin Roosevelt in the 1930s amid the Great Depression. Its purpose was to stave off a socialist revolution in America. It was a response to a militant upsurge of strikes and violent class battles, led by socialists who were inspired by the 1917 Russian Revolution that had occurred less than two decades before.

American capitalism could afford to make such concessions because of its economic dominance. The past forty years have been characterized by the continued decline of American capitalism on a world stage relative to its major rivals. The ruling class has responded to this crisis with a social counterrevolution to claw back all gains won by workers. This has been carried out under both Democratic and Republican administrations and with the assistance of the trade unions.

Since the 2008 crash, first under Bush and Obama, and now Trump, the ruling elites have pursued a single-minded policy of enriching the wealthy, through free credit, corporate bailouts and tax cuts, while slashing spending on social services.

To claim as does Ocasio-Cortez that American capitalism can provide a new "New Deal," of a green or any other variety, is to pfile:///F:/Private_html/Skeptics/Political_skeptic/Neoliberalism/Historyromote an obvious political fiction."

https://www.wsws.org/en/articles/2018/11/23/cort-n23.html

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[Nov 27, 2018] American capitalism could afford to make concessions assiciated with The New Deal because of its economic dominance. The past forty years have been characterized by the continued decline of American capitalism on a world stage relative to its major rivals. The ruling class has responded to this crisis with a neoliberal counterrevolution to claw back all gains won by workers. This policy has been carried out under both Democratic and Republican administrations and with the assistance of the trade unions. Published on Nov 27, 2018 | thenewkremlinstooge.wordpress.com

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Last modified: November 01, 2019