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Skepticism and Pseudoscience > Who Rules America > Neoliberal Brainwashing
Even though I agreed with him, I warned that whenever someone tried to raise the issue, he or she was accused of fomenting class warfare. “There’s class warfare, all right, "Mr. Buffett said, “but it’s my class, the rich class, that’s making war, and we’re winning." Make no mistake, the neo-Liberal fuckers are just as bad as the Stalinists May '68 and its Afterlives [Review] GB: once a great cultured nation, now a poorly-educated gangster mafia state, ruled by oligarchs and inhabited by soccer hooligans |
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| Neoliberalism is not a post-war version of capitalism. It’s a post-war version of fascism. washunate September 10, 2015 at 2:05 pm; comment to the post David Kotz: Understanding Contemporary Capitalism, Part I Imagine if the people of the Soviet Union had never heard of communism. The ideology that dominates our lives has, for most of us, no name. Mention it in conversation and you'll be rewarded with a shrug. Even if your listeners have heard the term before, they will struggle to define it. Neoliberalism: do you know what it is? Its anonymity is both a symptom and cause of its power.
Neoliberalism – the ideology at the root of all our problems |
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Neoliberalism is a new form of corporatism based on the ideology of market fundamentalism, dominance of finance in the economy (and restoration of the political power of financial oligarchy) and cult of the rich ("greed is good"). Under corporatism, all economic and political power belongs to the corporations, whatever this term means. In other words large corporations, military, intelligence agencies (which at the end represent interest of financial oligarchy), etc are dominant political players and filter all political candidates via various mechanisms, including, but not not limited to, by controlling dominant political parties, MSM, allocating money for election of a particular candidate and providing him/her with favorable coverage of controlled by the same corporatist structures press. Older forms corporatism also has elements of the greatness of the state (Mussolini Italy), racial, ethnic or cultural superiority (which actually is present in the USA in the form of American exceptionalism, which is a form of cultural nationalism). Neoliberalism is a variation of classic corporatism that refines and mutates several of those elements, preserving the essential -- the total control of state by tiny unelected élite of large corporations executives (mainly financial oligarchy in this case).
The other important avenue of analysis of neoliberalism comes from its similarities to Trotskyism. One can view neoliberalism as Trotskyism refashioned for elite. Or "socialism for corporations" along with feudalism for everybody else. Instead of "proletarians of all countries unite" we have slogan "neoliberal elites of all countries unite". Like Communism is supposed to be the result of revolt of proletariat against its oppressions, Neoliberalism can be considered to be the revolt of the elite (and first of all financial elite) against excessive level of equality that characterized the world after WWII. Like Trotskyism in the past, it is a militant and dogmatic faith that intends to silence or even burns heretics and utilizes the full power of propaganda to brainwash the population.
The "Union of Neoliberal Republics" have little tolerance for other social system, or deviations from Washington consensus. Media dogs and intelligence agencies are unleashed on dissenters, especially on economic nationalists. Anti-Iraq campaign before Iraq war, as well as anti-Russian campaign unleashed in 2016-2017, and anti Trump hysteria of 2017 are good examples here. False pretexts are use to get that is wanted, truth and justice be damned. Subversive methods like color revolutions are polished to perfection. If to stage a color revolution is not possible, direct military invasion is always an option ("export of neoliberal democracy on the tips of bayonets", so to speak). See Fake News scare and US NeoMcCartyism
The key idea here is that "free market" in neoliberalism replaces the notion of "dictatorship of proletariat". So they do not want to wait until "free market" wins in the society on its own merits. They do not believe in Laissez-faire. Like Trotskyites and Leninists they want to use state to build the society in which "dictatorship of market" happens. To enforce this society on people. Unlike libertarian dream of the state as "night watchman", state under neoliberalism is an instrument of enforcing this "free market" mechanisms and neoliberal ideology on the society, despite any possible resistance. Very similar to Bolshevik state, or Islamic state if you wish.
Monte Perelin society which developed the neoliberal doctrine and served like Communist International (Comintern) for neoliberalism, was deliberately structured like a Congress of pre-selected and pre-approved thinkers, allowing no dissent, and working in secrecy toward common goal. They explicitly rework the key methods of social struggle invented by Bolsheviks and Trotskyites to the their own ends. for example the idea of party of professional revolutionaries was replaced by idea of creating a set of "think tanks" promoting neoliberal ideology. Many subversive method used by neoliberal state to enforce the rule of neoliberalism in other countries were first invented and tried by Communist International. Marx is probably now spinning in his grave seeing how his teaching and methods adapted by social-democratic parties were subverted and bastardized to serve the rich, the financial oligarchy.
According to neoliberal doctrine, free maker like socialist social system just do not happen naturally: they should be built and enforced by the "party". Which in this case was constructed of bribed intellectuals (with some renegade Trostiates like and (what is even more important) with thing tanks. And as we all know tanks is formidable weapon on a modern battlefields. The same is true with think tanks in social battlefields. So like Trotskyites they are constructivists long before the term became popular (neoliberalism as a movement belong to early 30th). Nothing is left to the chance.
In other words this like Trotskyism this is an ersatz religion -- "market uber alles" religion. Market under neoliberal doctrine does not need any justification. It is a ultimate deity that judge mere mortals and requires compliance, achieved by spilling blood, if necessary. Much like the idea of communism is a deity for Bolsheviks. Kind of heaven on the earth. In this sense this is market fundamentalism which is a lot in common with Islamic Fundamentalism. Market is the heaven on earth for neoliberals. No matter what the actual reality is.
Like Trotskyites they were militant faction which wanted to seize the power but whatever means possible. And they want to forcefully destroy all alternatives including first of all socialism. Their attitude toward socialism is the exact morrow of Trotskyites view about capitalism -- they believe that socialism belong to the dustbin of history, and if it does not want to die "naturally" it is OK to help him to go to the grave. 1973 Chilean coup d'état against President Salvador Allende, is a perfect example of their ideology in action. color revolution are another. This is how Lenin would force the revolution. They just uses CIA instead of terrorist underground forces used by Bolsheviks (in case of Bolsheviks often cooperating with anarchist military faction -- so called 'boeviks"). There is even some uneasy alliance of islamist radicals Western intelligence agencies and neoliberal NGO in which neoliberal try to use islamist to achieve their goals. The same lack of principles and amorality was typical for Bolsheviks. In is important to understand that despite scholarly camouflage key neoliberal figures such as Milton Friedman were actually criminals. Minton Friedman hands were up to the elbow in blood of innocent victims due to killing many Chileans during Pinochet coup (objective view is our view of people which we do not like, so communists probably provided the most biting critique of neoliberalism and neoliberals ;-) :
In 1975, the New York Times accurately labeled him “the guiding light of the junta’s economic policy” (21 September 1975). The CIA funded a 300-page Friedmanite blueprint given to the leaders of the junta in preparation for the coup. In March 1975 Friedman himself, accompanied by his U of C cohort Arnold Harberger, flew to Chile for high-level talks with the regime to outline the economic “shock treatment” that led to the mass starvation of those who had survived the initial phase of bloodletting.
So the world revolution in Trotskyite doctrine is simply replaced by "world neoliberal revolution by what ever means possible". Criminal actions are OK. Like with Trotskyism "the goal justifies the means".
Another interesting question is why those people were help-bent of anti-communism, were so adamantly against socialism? One explanation is that most of them were from Austrian aristocracy circles. Another is that in their view (and first of all Hayek) market is a kind of natural "supercomputer" that can provide solutions to all world problems that no government can do. But, at the same time being closet neo-Trotskyites they advocate military coups and killing of dissenters to achieve their goals.
Their "utilitarian view" of the legitimacy of government, also extents to science. Like for Trotskyites with their bogus concept of "proletarian science", the science in their worldview is useful only to the extent it help to built neoliberalism. So there is scientific theories and scientists which needs to be financially supported and promoted and the scientific theories and scientists that needs to be suppressed and ostracized. Kind of new Lysenkoism.
That sound profoundly anti-democratic and that's completely true. Neoliberals do not care about democracy. They care only about "free market" -- thier deity like communists cared obly about Communism -- their deity. And both are ready to commit any crimes to achieve their goals. In other words they are a new type of a dangerous totalitarian sect. and the brand of Totalitarism they promote was called by Wolin "Inverted Totalitarism". Their approach smells with Lysenkoism. And that' true -- neoliberal practice is very close to practice of Lysenkoism, especially in the field of economics: they occupied all commanding positions in economic departments of universities and forcefully suppress any dissent. The only difference is that they use the power of state just for ostracism and isolation. They do not send "non-conforming" scientists to GULAG like Bolsheviks did. But they introduce a new interesting nuance: as the science became a "marketplace of ideas", under neoliberalism you can just buy the scientist you like on the market. Education also needs to be restructured as market. Which already happened in the USA.
So we really are talking about neoliberal revolution in the USA, which destroyed the New Deal capitalism by mercilessly destroying all the relevant law. You are liming in new brave neoliberal world now.
We can think about neoliberalism employing typical Trotskyite methods of "gain power first" implement neoliberal policies later. In a way, neoliberalism is the second after Bolshevism social model that is totally artificially constructed and explicitly planned to be enforced on unsuspecting people via subversive actions of a totalitarian sect. Like Bolshevism was dictatorship of the Communist Party nomenklatura, neoliberalism is dictatorship of financial oligarchy. Both neoliberalism and Bolshevism despise democracy and need a strong state which implements neoliberal policies "from above" -- reforming the society despite the wishes of population (exactly like bolshevism did it in the USSR space and later in Eastern Europe).
This symbiosis of strong state (in a form of "national security state" and super powerful intelligence agencies -- often called "the deep state") and corporation via the rule of financial oligarchy makes neoliberalism a modern flavor of corporatism. Inverted totalitarism as Sheldon Wolin called it. Like bolshevism neoliberalism relies of power of propaganda (first of all via think tanks -- its ingenious invention) as well as classic methods used by Bolsheviks such as indoctrination via economics courses at university economics departments and constant pro-neoliberal propaganda in major MSM owned and operated by large corporations.
Up to 2000 in the USA standard of living and employment level was maintained (partially via computer revolution, partially via "expropriation" of resources and capital at xUSSR space), although there are limits to that and at some point self-destruction process inevitably starts and the neoliberal society gradually slips into secular stagnation, somewhat similar to Brezhnev's stagnation period in the USSR. In the USA is characterized by the loss of jobs and manufacturing to outsourcing, as well as degeneration of neoliberal elite (matching if not exceeding the degeneration of neoliberal elite). Which at the end created conditions for the rise to power of Trump and his team of "bastard neoliberals" (neoliberalism without neoliberal globalization, somewhat similar to Stalin's idea of 'socialism ins single country").
Like Trotskyism in the past (with their slogan of "World revolution" borrowed by neoliberalism) neoliberals in general and neocons in particular (as "neoliberals with the gun") are hell-bent of creating Global Neoliberal empire. Killing millions people in the process. And destroying the well-being of the majorly of people in their host country (the USA in case of neoliberals, the Russian empire -- USSR -- in case of Trotskyites and later Bolsheviks ).
For them ‘We Think the Price Is Worth It’" as Secretary of State Madeleine Albright put it. This Nietzschean-style complete disregard of common people is probably the most common feature between those two "man-eater" class ideologies. Those Nietzschean Ubermensch like classic psychopaths just do not have compassion for other people. They are objects, tools for them. Actually you learn a lot about neoliberals by studying psychopath and sociopath behaviour, especially female sociopath. The percent of sociopaths in the society is by various estimate is over 5% which considerably exceeds the number of people required for forming the elite or the top 1% of neoliberal society.
Like Marxism before, neoliberalism provides its own ethics and its own rationality. It enforces a new encompassing "economic rationalism" (aka economism) , which should displace old, "outdated" and more humane rationality of New Deal capitalism.
The ethics of neoliberalism, or "Neoliberal rationality", is heavily tilted toward viewing people as "homo economicus". Like Marxism (and, by extension, Trotskyism and Bolshevism/Stalinism ) it "articulates crucial elements of the language, practice and subjectivity according to a specific image of the economics." Like Trotskyism before it directly assaults the idea of democratic governance and the rule of the law proving perverted rationality, elements of which are erringly similar to the ideas of "vanguard", "proletarian justice", " journalists as solders of the Party" and, especially, "Permanent Revolution".
It rejects the idea of social solidarity (emphasizing it for Undermensch "individual responsibility" including "who does not work, should not eat") replacing it, like Marxism before, with the idea of class solidarity (The members of transnational financial elite unite"). They also pervert the idea of the rule of the law, which animated so much of modernity, hollowing out democratic practices and institutions while at the same time catalyzing radical, brutal (as in neo-feudal) forms of the elite dominance, promoting Nietzsche separation of mankind into two caste: Undermensch ("despicables" in Hillary Clinton words) and Ubermensch ("creative class"). In a way neoliberalism is socialism for rich and feudalism for poor.
Like Marxism before it, neoliberalism wear the mantle of inevitability. As Bruce Wilder noted in his post on Crooked Timber blog (11.16.16 at 10:07 pm 30):
It was characteristic of neoliberalism that the policy, policy intention and policy consequences were hidden behind a rhetoric of markets and technological inevitability.
Matt Stoller has identified this as the statecraft of neoliberalism: the elimination of political agency and responsibility for economic performance and outcomes. Globalization and financialization were just "forces" that just happened, in a meteorological economics.
For example, instead of permanent revolution we have permanent democratization via color revolutions and military invasions for the expansion of neoliberal empire.. With the same fake idea of creating a global neoliberal empire which will make everybody happy and prosperous.
While this is never advertized (and actually the whole term "neoliberalism" is kind of "hidden" from the population and its discussion is a taboo in neoliberal MSM), implicitly Neoliberalism adopted a considerable part of Trotskyism doctrine and even bigger part of its practice, especially foreign policy practice. Like KGB in the USSR, CIA became presidents praetorian guard (which occasionally revolt, see JFK assassination).
All-in-all like Logos noted this is yet another stunning "economic-political" utopia with the level of economic determinism even more ambitious than that of Marx... But what is important to understand is that this doctrine incorporates significant parts of Trotskyism in pretty innovating, unobvious way. Thus, Marx famous quote "History repeats itself, first as tragedy, second as farce" is fully applicable here: instead of revolt of proletariat which Marxists expected we got the revolt of financial oligarchy. And this revolt led to the formation of the powerful Transnational Elite International (with Congresses in Basel) instead of Communist International (with Congresses in Moscow). Both Trotsky and Marx are probably rolling in their graves seeing such a wicked mutation of their beloved political ideology.
Neoliberalism is also an example of emergence of ideologies, not from their persuasive power or inner logic, but from the private interests of the ruling elite. Political pressure and money created the situation in which intellectually bankrupt ideas could prevail much like Catholicism prevailed during Dark Ages in Europe. In a way, this is return to Dark Ages on a new level. Hopefully this period will not last as long. But as there is no countervailing force on the horizon, only the major change in economic conditions, such as end of cheap oil can lead to demise of neoliberalism.
I would call neoliberalism "the ideology that dare not speak it's name". It is pretty unique situation when you have this globally dominant ideology that is adopted by most governments and political parties around the world, but it is never mentioned by name.
Like stealth fighters are invisible to radar, we can call neoliberalism to be the first "stealth ideology" which is creates a unique set of problems. The first of them is that public is unaware of the term, its definition and consequences of living under neoliberal rule. Here this page might help.
The mail reason neoliberalism is "stealth ideology", is because if its key postulates are declared openly it would be rejected by population. And neoliberals would have difficulties to put its puppets in political offices, if it's full agenda was publicly known and understood because this is the ideology that the benefits the top 1% or more precisely the top 0.1%. As unique combination of 'socialism for the rich and feudalism for the poor, it incorporates the major element of feudalism -- super-competitive, militant upper class (neoliberal aristocracy, which consists mainly financial oligarchy and upper level of politicians and industry moguls) and is essentially above the law, and cooperative, passive and oppressed lower classes (from comment to george-monbiot article):
The irony is that without the innate cooperativeness of human beings, the agenda of neoliberalism would be impossible. If humans were really as competitive as neoliberalism suggests, then people would tear the wealth out of the hands of the neoliberal elite, instead of passively working for them.
In other words, this is managed competitiveness. If you go back to the era when societies were ruled by kings, and most of the population were serfs, peasants. The last thing the leaders of these societies wanted were for the population to be too competitive. However, at the same time these aristocrats were constantly plotting against each other and trying to extend their power and wealth by conquest, in an ultra competitive way.
Another reason for trying to remain stealth, is that like many religious doctrines it belongs to the class of Theological Voluntarism (with some pseudo mathematical voodoo attached as a justification; actually even this is not new. Iranian ayatollahs in the past needed to demonstrate proficiency in mathematics) , but unlike most classic philosophies and classic religions it does not try to suppress greed. On the contrary it pronounces it to be a virtue ("Greed is good"). That creates an impulse of self-destruction within any neoliberal society. Neoliberalism is the snake that eats its own tail. Which wouldn't be too bad if we weren't all part of the snake. The atomization and self-interested behaviour neoliberalism promotes run counter to the core of major philosophies too. As well as all major religions.
Like Trotskyism before it profess that all actions of the elite need to be covered under smokescreen of propaganda which is unprecedented in its cynicism, hypocrisy and contempt to the ordinary people. And it is really to kill millions of people to achieve its ultimate, the same as in Trotskyism, goal: world domination, in this case the creation of the global neoliberal empire ruled by the USA.
And the level of cynicism of neoliberal elite probably is exceeding cynicism of the USSR leadership which promoted the same redistribution of wealth up ( in case of the USSR mainly to military industrial complex and nomenklatura ) using Big Brother style slogans like "The Party cares for the wellbeing of the people". Here also proclaimed goals of higher material well-being are not achievable outside, say, top ten percent of population.
And like Bolshevism in the USSR at some point people stop trusting the elite and MSM. We already have the level of distrust of the neoliberal elite and MSM that is probably comparable to which existed in the USSR toward nomenklatura and official press/TV/radio.
This is a tailor-made ideology for financial oligarchy and large international corporations, who simply want to carve the "economic cake" for themselves on the whole globe. They created a political system that is the very opposite of what our leadership, the mass media, opinion leaders, think tanks etc. proclaim to be -- the world's foremost, exemplary democracy. As such the level of hypocrisy of neoliberal MSM exceeds even the level typical for Communist propaganda.
Being a flavor of corporatism, neoliberalism presumes a strong state, working only for the benefit of the corporations, and as such it has little pretence to neutrality and universality, unlike the classical liberalism. As an ideology it can be aptly characterized as Trotskyism for the rich -- it inherits fundamental tenets of Trotskyism with just replacing "proletariat" with the "elite" (as in "Elite of all countries unite!"), or, more precisely, with the financial oligarchy -- which is the core of transnational, globalized elite. Like in the USSR upper part of the elite (aka "Masters of the Universe" roughly equivalent to the notion of Soviet nomenklatura) are above the law. Much like Brezhnev's socialism and feudal societies it shrinks middle class because the repressive power of state is enough to preserve the rule of the elite.
Neoliberalism is adamantly anti-labor union creed, much like Soviet ideology (although justification were different: neoliberalism profess market individualism for which collective bargaining is anathema, while Soviet ideology claimed that the regime represented interests of workers, making labor unions redundant). Both regimes obsessively control and indoctrinate academics, although neoliberalism doe not use witch hunt (like Lysenkoism) -- ostracism and deprivation of funding is enough to keep academic scholars on a short leash. In both cases the press is subservant to the ruling oligarchy and is neither independent, not free.
To supress social protest relies of "infinite growth" concept (like cpaitalism in general). But infinite growth contradicts finite resources and finite nature of Earth.
While neoliberalism (or "corporations uber alles" as we can call it) proved to be a more dynamic social system then stagnant "Brezhnev's socialism" which it successfully destroyed (with the whole "Socialist camp"), it is one step forward two steps back in comparison with New Deal type of capitalism and, especially, social democracies of Scandinavian countries. Which neoliberalism also successfully destroying. At the same time like communism this is another "universalist ideology" based on false hopes of "salvation" via market mechanisms. Similar to communist expansion( Trotsky idea of "permanent revolution") the neoliberal world now is preoccupied with the neoliberal expansionism, with the opening of foreign markets for transnational corporations, using military invasions, where necessary and color revolutions utilizing local compradors (fifth column) were appropriate. Like with Communism, imperial ambitions are not only territorial; they are also ideological. This ideology, or is you wish, secular religion (there is nothing scientific in neoliberal doctrine, especially in economic part of it) is now exported to any country via so called color revolutions like socialism was exported by the USSR in some Asian and African countries. Unlike classic colonialism and much like Soviet rule in Eastern Europe, neoliberal occupation is not dependent on direct occupation of the country by military forces. It's more combination of using local compradors and financial occupation via debt slavery (neocolonialism). It always tries to use as local occupying force the part of local elite closely connected to transnational corporations and storing their financial assets in Western banks and their families in Western capitals. Neoliberalism successfully expanded not only by direct conquest like in Iraq, but via co-optation of a part of the local elites (aka fifth column of globalization) or by staging color revolutions.
In way neoliberal is a unique social system that mobilized the power of greed (in a very destructive for the 99% of the society way) while most previous social system tried to suppress it. Usury laws are classic example here. They were revoked under neoliberalism (payday loans is plain vanilla usury; credit card debt is often close at 18% or higher). The only criteria of any activity is economic success (which closely relates neoliberalism to Marxism, which similarly viewed as economics as primary force of progress of human civilization and social "superstructure" as secondary element in human societies which automatically reflects the economic base). As an economic doctrine neoliberalism repudiates Keynesian welfare state and promoted the "law of jungle" (homo homini lupus est) principles using bought (on cheap) ideologues like Milton Friedman and dubious fighters for economic freedom like late Friedrich von Hayek. In other words it favor of "dog eats dog" forms of competition which were the hallmark of early capitalism (Austrian aristocrat Friedrich von Hayek probably would have a stoke if he saw the current "dog eats dog" implementation of his ideas).
Commonly under the term "neoliberalism" we understand a set ideas that include a radically "free"(but nor fair) market, maximized competition and "free trade" (which actually is neither free nor fair) achieved through making the government subservant to the interests of multinationals ("Quite coup"), economic de-regulation which led to systemic instability of the financial sector, elimination of tariffs, a range of monetary and social policies favorable to business and indifferent toward middle, class, unionized workers, and especially poor (some strata of which like single mothers in the USA reminds status of the same groups in classic "banana republics" -- see Wall-Mar poor). It adopts explicit and powerful policies redistribution of wealth up via direct tax cuts for the rich and casino properties of stock market (which is the central institution of neoliberal order), cultural decimation of any competing ideology (like Brezhnev socialism), acceleration of Earth resource depletion (see Plato Oil as Hubert Peak in condition of rising oil prices ) and environmental destruction due to the "race to the bottom" and removal previously introduced environmental standards, especially in third world countries. Increasing profits of corporations (aka "increasing shareholder value" which actually means bigger bonuses for corporate brass) and "cult of GDP" became primary goals of economic development.
But it is more then that. Like Marxism and most world religions neoliberalism indoctrinates humans with what is called " neoliberal rationality" which organizes the world view of adherents to neoliberalism. It reaches far beyond the market. Neoliberal rationality defines human beings as market actors (homo economicus). All dimensions of human life are cast in terms of a market relations. Including such things like love, sex and marriage. Actions and policies are reduced to the bare question of profitability. For example under neoliberalism universities became service provider (note the term !) with the primary goal of profitability. Not enhancing the society knowledge and preparing educated citizens. It becomes a narrow, overspecialized preparation for indoctrination of students in neoliberal thinking (via obligatory neoclassical economics courses) and narrow, and too early specialization directing on "entering the job market". Like soviet educational system is explicitly designed to produced indoctrinated (just in neoliberalism instead of Marxism), narrow minded individuals, who never question the social system they live in. While under Marxism people viewed their mission as increasing equality by sacrificing themselves for the society, under neoliberalism people are trained to view themselves as entrepreneurs (privileged set of market actors, above regular employees), the whole game for which is to get larger chunk of property and who know only Excel calculations of profitability, the rules of competition and are ready to play it hard against all others (homo homini lupus est) to get themselves a nice space under the sun in "dog eats dog" game. Criminality of their action be damned, the financial success itself is a justifying moral principle under neoliberalism.
In other words neoliberalism subvert university education like other institutions into instruments for developing, dissimilating and institutionalizing such a rationality. Exactly like universities in the USSR were structured to indoctrinate students in Marxism orthodoxy. Neoliberals reject the idea that the economy must be directed and protected by society laws and policy as well as by the dissemination of social norms designed to facilitate not only competition but cooperation as well. universities used to teach its students to consider the costs, benefits, and consequences of individual action in view of the "society at large". The need for any healthy society to support for the vulnerable and needy is denied. This set of ideas is completely withdrawn. Under neoliberal doctrine, poor or unemployed are guilty themselves for their miserable status. And should better die, not to crowd the Earth surface. Everybody is on his/her own. As Thatcher quipped: “There is no such thing as society. There are individual men and women, and there are families”
Political citizenship is radically reduced within the neoliberal framework to unprecedented degree of passivity and political complacency. The role of citizen is downgraded to consumption: "go shopping" was the famous Bush II recommendation after 9/11. Elections were emasculated to the choice of two preselected representative of the ruling elite (Two Party System as Polyarchy) selection of which is fully controlled by ruling oligarchy (in the USA via monetary mechanism as candidates need a "war chest" to run in elections which typically can come only from the powers that be).
Even nation-states must think and behave like a market actors. The languages of cost-benefit analysis and calculation sweep into governmental decision-making. In the "neoliberal rationality" the health and growth of the economy (with its absolutization of GDP) is the only basis of legitimacy of the state. The slogan is “It’s the economy, stupid.”
"Economic colonization" of the life under neoliberal ideology sometimes reached grotesque forms with even dating is analyzed in market terms, with love as marketing yourselves to the higher bidder, and marriage as the final compromise, the "deal" reached by two parties.
Neoliberalism like Marxism before it is truly expansionist ideology with global ambitions. Like was the case with Marxism there is no "rational" limit to the neoliberal global expansion (actually only the size of the planet Earth is the limit). Neoliberal states and, especially the USA as the center of global neoliberal empire, are aggressive war hawks in very precise meaning of this word. The USA wants to overthrow each and every government which is not friendly enough to "Washington consensus" (neoliberal charter for all countries outside G7). For this purpose the mechanism of overthrowing foreign governments via close interaction of local fifth column and intelligence agencies of the USA and several other Western countries called " color revolutions" was invented and polished via repeated coups in various part of the globe. It tends to deal with "infidels" in a manner that would be approved by leadership of ISIS. Poor colonel Gaddafi, who was sodomized with a bayonet is one such example.
Color revolutions performed under the banner of democracy and liberty could not easily be stopped by governments of many third world and xUSSR countries as they undermine legitimacy of the government in a very vicious way: pretending that such a revolution is not a tool of neoliberal occupation of the country, but genuine fight for the "spread of democracy".
Much like was the case with USSR exporting proletarian revolution under the banner of fight with inequality in other countries. Yet, the neoliberal experience on many country that experienced neoliberal revolutions directed by State Department now clearly see that spread of neoliberalism is in reality a neocolonial expansion had crippled mechanisms of the self-defence the society and allow transnational exploit is resources and eliminate in the name of profits national social security net. If such enforced exploitative foreign ownership of country strategic resources produces peoples revolt it is brutally suppressed by comprador regime installed in the county. All in the name of democracy and freedom.
Neoliberalism dramatically increase the level of inequality of population in the societies of third countries and pushed large swats of population in abject poverty like happened in Ukraine (were the mojority of population now lives on less then $2 a day) and is happening in Greece. There is great and purposely maintained divergence in the standard of living between neoliberal center (G7) and neoliberal periphery, which facilitates brain drain and dooms the country to be just a source of cheap commodores and labor for G7 and friend.
Like in good old times of British empire. Poverty as well as arrested economic development, if not under-development and sliding into debt slavery (with gentle encouragement of IMF) are common.
The process of transition from a neoliberal colony status to sustainable independence is currently uncharted territory. Only few countries made significant steps in this direction. Russia is one example because it was really a neoliberal colony under Yeltsin regime and completely lost its independence, although progress is limited and it remains "a second rate" neoliberal country (it entered WTO under Putin) not allowed to the club of "prime" neoliberal countries; there are also some steps in Latin American countries in the same direction, but due to proximity of the USA and absence of nuclear deterrent for neoliberal aggression their position is more fragile and success can be only temporary. But Russian example also show the danger of resistance: sanctions were imposed on Russia under phony pretext, but in reality because of the deviation from the Washington consensus. and the USA neoliberal elite is hell bent of deposing Putin and facilitation the process of disintegration of the county of smaller, powerless, or even better, fighting with each other in the matter implemented in Middle East, statelets. Facilitation of the spread of fundamentalist versions of Islam (especially Saudi Wahhabism ) in xUSSR space is the tactics used by the USA since the Afghanistan invasion the USSR (a masterfully trap organized for Soviets by late Sigmund Brzezinski and Carter administration the side effect of which was the creation of political Islam, which later emerged in the form of Taliban, Al Qaeda and ISIS ). They did achieved some level of success in Chechnya and Dagestan.
As of 2016 neoliberalism remains the dominant social ideology and practice in the world, which still continues its global expansion and war of suppression of "not neoliberal enough" governments. It survived and entered in "non-dead" (zombie) stage after 2008 crisis (see The Strange Non-death of Neo-liberalism by Colin Crouch). It is till expanding and trying to colonize new states into global neoliberal empire (Libya, Syria and Ukraine are "post 2008" examples).
At the same time after approximately 35 years of being dominant in world (if we assume that 1980 was the year then neoliberalism came to power in the USA; in reality it happened earlier under Carter and Chile coup of 1973 was the first country converted into neoliberal governance) is shows some significant cracks. While neoliberalism enjoyed strong political ascendance since 1980th, ideology itself is much older and its origins can be traced to first decade after WWII; the seeds were firmly planted in 1965 with the establishment of free trade zones and Mexican maquiladoras (factories that produce for export) under so called the Border Industrialization Program. Even at this, early stage the key feature of neoliberalism were evident -- outsourcing labor to the third word countries, as the method of undermining power of unions in the USA. Along with the elimination of unions, classic neoliberalism promotes reduced taxation of rich and corporations, reduced regulation, and minimizing redistributive function of government and favoring the rich and powerful elite and first of all financial oligarchy. This minimization of government functions is not about the reduction of military budget, but about dismantling of safety net established under New Deal, including the privatization of health and retirement benefits. In countries outside the USA neoliberalism is also a strong proponent of opening up of the economy to foreign competition. Supporters of neoliberalism created real "fifth column" out of universities economic departments with small targeted grants and various forms of corruption of large percentage of professors (speaking engagements, higher salary, exorbitant consulting fees, etc).
In any case neoliberalism now is close to the longevity as the New Deal Capitalism (1933-1980). And unless oil price goes through the roof (undercutting globalization) neoliberalism in the USA has chances to outlive socialism in Soviet Russia which lasted 74 years (1917-1991), as there is no viable countervailing force on the horizon. Opposition to the new world order by resource nationalists (like Putin) and Catholic church does not cardinally changes this situation. After all Russia by all accounts is still "yet another neoliberal state" (the same is true for China). It entered WTO under Putin. Russian elite, like German elite just want a better place in neoliberal world, which was denied for them by the USA and other Western European elites.
Formally we can view neoliberalism as a flavor of corporatism (in sense that corporations are dominant political actors -- as Senator Dick Durbin aptly quipped about US Congress "Banks frankly own the place"). As such it might be more properly called neo-corporatism and it is district from classic corporatism which rely of dominant political party and suppression of dissent by force by using indirect "iron fist in soft glove" methods based on the power of finance (see Inverted Totalitarism). While rhetoric of Lebensraum im Osten and natural selection (like in "separating incompetent or systematically unlucky people from the control of valuable resources") is not unique to neoliberalism, it is neofascist in spirit (see neofascism and National Socialist Program). While globalist in nature, it paradoxically stimulates growth of local far right or openly neofascist parties (as we see in Greece, Hungary, Israel and Ukraine).
Under neoliberalism the wealthy and their bought academic servants, see inequality as a noble outcome. University professors of economics form the most corrupt part of the intellectual elite – they are nothing more than employees of the financial oligarchy paid to administer intellectual anesthetic to those among debt slaves, who still have enough time to ask what’s going on. For a relatively modest (in comparison with politicians like Hillary Clinton) remuneration they help to enrich top 1%, shrink middle class making it less secure, and further impoverish poor elimination some social programs and cutting others. Please note that redistribution of wealth up is an officially stated goal. In 1992, when asked what Iran-Contra operation was really all about, Bush I replied that it was done for "...the continuous consolidation of money and power into higher, tighter and righter hands."
In its essence neoliberalism was a counterrevolution aimed at destroying established after WWII compromise between workers and capitalists based on state capitalism model, which in the US was called the New Deal and in Europe Scandinavian model of socialism. In most simple form neoliberalism can be defined as an attempt to restore the rule of international financial oligarchy over society, as a new form of corporatism, of, if you like, neofascism (not always in velvet gloves for countries outside G7; see Pinochet history of repression in Chile, for example) . Unlike classic forms of corporatism such as German and Italian fascism here we do not see the dominant nationalistic, far right political party that suppresses all the political opponents. Instead this is an organized movement of the top echelon of corporations and, first of all, global/transnational corporations, who decided to enforce the same indirect and mostly economic form of control over population that were polished within corporate environment and in battles with the unions. It can be called "fascism without nationalism". Such social system also sometimes was called Inverted Totalitarism, "casino capitalism", or "fascism in velvet gloves".
Like classic corporatism and involves complete dominance of large corporations over government ("corporate socialism"), including but not limited to conversion of goals of multinationals into state foreign policy goals (achievable by wars, if other means fail). The usurpation of large multinationals of political life of the country is achieved mainly by economic means, but assassinations of "non-conformant" political leaders are not excluded as "deep state" is a part of neoliberal power structure and has capabilities of physically eliminating opponents. Still the main form is by buying politicians and key intellectuals as well as controlling all major political appointments (including the selection of Presidential Candidates). In a way the society became "occupied" in a very precise meaning of this word (and that's why "Occupy Wall Street" movement is misnomer; it should be called anti-occupation movement). Citizens and most countries are transformed into indented servants of large corporations and their economic and political interests.
Debt slavery is the standard, preferred tool of neoliberal control both over individuals and countries. One of the key strategy of subduing the countries by bringing to power neoliberal elite (fifth column of globalization) as well as enforcing on the country large unplayable debt. Essentially converting such a country into debt slave rules by vassal government, which oversee transfer of funds to metropolia. Thos model replaces direct occupation model used by British and other empires.
Greece and Ukraine are two most recent examples of this policy in action. Typically this is done with giving the country large loans for questionable projects, and large part of allocated money is promptly stolen by local neoliberal elite. Then when crisis struck and institutions that took the load can't pay, they are bailed out by converting those loads from private to public via IMF. This is the key mechanism of redistribution of wealth -- profits are private, but losses s are public.
From the other point of view we can view neoliberalism as the next stage of corporatism, as corporatism that had outgrown national boundaries and became global. In other words in 70th of the last century, the civilization made an interesting turn, returning to the state where a supranational structures, which in the middle ages were called religious orders, returned to the prime scène in the form of transnational corporations, IMF (which represents interests of US financial oligarchy) and World Bank with budgets that exceed the GDP of most States and political influence, exceeding traditional political influence of international institutions such as UN, UNESCO, etc. An interesting nuance is that national three letter agencies also became important players in this new global governing corporatist alliance, acquiring a political role similar to transnational corporations as the key part of National Security State and forming the core of so called "deep state":
Yes, there is another government concealed behind the one that is visible at either end of Pennsylvania Avenue, a hybrid entity of public and private institutions ruling the country according to consistent patterns in season and out, connected to, but only intermittently controlled by, the visible state whose leaders we choose. My analysis of this phenomenon is not an exposé of a secret, conspiratorial cabal; the state within a state is hiding mostly in plain sight, and its operators mainly act in the light of day. Nor can this other government be accurately termed an “establishment.” All complex societies have an establishment, a social network committed to its own enrichment and perpetuation. In terms of its scope, financial resources and sheer global reach, the American hybrid state, the Deep State, is in a class by itself. That said, it is neither omniscient nor invincible. The institution is not so much sinister (although it has highly sinister aspects) as it is relentlessly well entrenched. Far from being invincible, its failures, such as those in Iraq, Afghanistan and Libya, are routine enough that it is only the Deep State’s protectiveness towards its higher-ranking personnel that allows them to escape the consequences of their frequent ineptitude. [2]
... ... ...
The Deep State does not consist of the entire government. It is a hybrid of national security and law enforcement agencies: the Department of Defense, the Department of State, the Department of Homeland Security, the Central Intelligence Agency and the Justice Department. I also include the Department of the Treasury because of its jurisdiction over financial flows, its enforcement of international sanctions and its organic symbiosis with Wall Street. All these agencies are coordinated by the Executive Office of the President via the National Security Council. Certain key areas of the judiciary belong to the Deep State, such as the Foreign Intelligence Surveillance Court, whose actions are mysterious even to most members of Congress. Also included are a handful of vital federal trial courts, such as the Eastern District of Virginia and the Southern District of Manhattan, where sensitive proceedings in national security cases are conducted. The final government component (and possibly last in precedence among the formal branches of government established by the Constitution) is a kind of rump Congress consisting of the congressional leadership and some (but not all) of the members of the defense and intelligence committees. The rest of Congress, normally so fractious and partisan, is mostly only intermittently aware of the Deep State and when required usually submits to a few well-chosen words from the State’s emissaries.
The American and British elite in 70th (starting with President Carter in the USA but coming into full force with President Reagan; Thatcher played similar role in GB) decided to liquidate the New Deal coalition and to cover up the upward redistribution of income with a smokescreen of neoliberal ideology. Which also served as anesthetic for lemmings which were mercilessly deprived of most safety net that they acquired due to New Deal ;-). As Lames Levy noted in his comment to Why the Claims Neoliberals Make About Markets Are Wrong naked capitalism
Jefferson’s notion of “marketplace of ideas” doesn’t apply to the ideology of the market. Bad ideas, like bad people, often thrive. Many of us were taught that this was not the case–good triumphs over evil, virtue is its own reward, and the arc of history is long, but it bends towards justice. The older I get, the more I doubt these things, the less evidence I see for them, and the less self-correction I see in scholarship
The institutions of neoliberal capitalism, while promoting an expanded role in the economy for "market forces" (read "financial oligarchy") simultaneously transform labor relations. The “market” under neoliberalism certainly no longer refers to competition as a form of the production and distribution goods and services. Instead, it means something more along the lines of international financial monopolies protected by collusion between captured vassal state institutions ( including neoliberal fifth column domination in the all major branches of government, especially executive and legislative branches, educational institutions and media) and multinationals, which pay money to sustain this social order. The term “Free markets” under neoliberalism means letting rich people do what they want and neutralizing any government interference on this path, not promoting efficient allocation of resources through competition and the price mechanism. The core of the fifth column are always local oligarchs and so called "Chicago boys" -- sons and daughters of local elite who are trained for and indoctrinated for this purpose in Western universities.
Under neoliberalism labor relations assumes the form of full domination of labor by capitalists under the disguise of "labor market' smokescreen which tries to atomize workers and deprive them of any solidarity actions. Unions ore officially suppressed and large part of middle class is brainwashed to hate using set of propaganda stories about unions corruption, Welfare queens , lack of competitiveness in unionized industries (with Detroit as a prime story), etc. In this sense crushing by Reagan of the strike of air controllers was one of the first manifestation of this dominance. Workers again are downgraded to the role of debt slaves, who should be glad to get subsistence wages. And, for example, wages in Wal-Mart are really on subsistence level, no question about it (Making Change at Walmart » Fact Sheet – Wages):
Walmart jobs are poverty-level jobs.
Walmart’s average sale Associate makes $8.81 per hour, according to IBISWorld, an independent market research group. This translates to annual pay of $15,576, based upon Walmart’s full-time status of 34 hours per week1. This is significantly below the 2010 Federal Poverty Level of $22,050 for a family of four. The Wall Street Journal reported that the average Walmart cashier makes just $8.48 an hour, far below the $11.22 national average for all cashiers.
This contrasts with the capital-labor compromise that characterized the state capitalism that existed several post-WWII decades and that was crushed by neoliberalism in 1970th. Neoliberalism also brought change in the relation between financial and non-financial capital: financial capital now again like in 1920th plays a dominant role dictating the rules of the game to manufacturing sector and controlling it via banks.
The key in understanding of neoliberalism is that nothing in neoliberal ideology can be taken in face value -- the cornerstone of neoliberal ideology is deception. More precisely, deception and propaganda (aka brainwashing) are two cornerstones of neoliberalism. As such is has a lot of common with criminal societies and like them has a definite tendencies to self-destruction. Here is one telling comment (Caelan MacIntyre, 12/05/2015 at 2:37 pm )
if we have a system that cheats, then anything is game.
Then I can cheat too. (And, along with others, I’ll likely be doing it on the ‘nitrous oxide’ of fury and resentment that some– maybe most– can feel when they wake up and realize that they’ve been cheated.)
So if sufficient numbers of (livid) people catch on, if they get out from under the cheating system’s ideological indoctrinations (that it’s not a cheat and that, say, coercive taxation, kid-killing cops and corporate parasites are all well and good and for our benefit), and find out that the game is really one big nasty rig/scam/dupe/hoodwink, what do you think will happen?
Let’s run the model/simulation and see.
Like new religion and much like the USSR in the past, neoliberalism cultivates a set of complex myths. Those myths via indoctrination became the way of thinking of most people in neoliberal societies. That's an example of amazing power of brainwashing for preservation of particular social order; the trait the neoliberalism also shares with Marxism (implemented as Bolshevism in the USSR and other Eastern block countries). But like was the case with the USSR, there is a danger of shocks that can kill those myths. If we agree with that hypothesis, then, simplifying, the longevity of neoliberal myths depends on the how long the role of the USA as the world hegemon will last and how long "cheap oil" regime will last.
For example the myth that neoliberalism produces poverty reduction and improve social wellbeing for all has become an alibi for the dismantling of the welfare state and along with it the dismantling of social rights of workers, on the one hand, and to the channeling of state coffers into private interests to the benefit of banks, financial institutions, and private business, on the other. This myth came under attack after 2008 crisis. Now most of the people see that neoliberal policies of wealth redistribution are shoveling most of the wealth gains into the pockets of a few rich plutocrats, As such they are incompatible with economic growth and reduction of poverty. Growing income inequality is a the main cause of excess saving and, hence, secular stagnation. But as a whole set of neoliberal myths proved to be pretty resilient; the same can be said about gradual process of eroding Marxist myths after 1945. It took almost 50 years (and rise of neoliberalism) to be abandoned by most of the population of the USSR and Eastern Europe after which those societies became "house of cards" and were successfully toppled by bribing part of the elite by Reagan administration via color revolution mechanisms. But it was the USSR elite (and first of all the elite of KGB), that first changed sides and let it happen.
Every society has its set of myths that are directed on increase chances of the society survival. What is new is that neoliberal elite like feudal elites before it openly despise even "lower 50%" of their own societies. Neoliberal elite event went further. It advocates a pretty self-destructive idea that that social safety nets created under New Deal should be completely dismantled. It looks to me like just a new form of elimination of undesirables: "While there will be political pressures to buffer folks from the consequences of economic folly or bad luck, it is socially dangerous to do so." This is reminiscent of Arbeit macht frei slogan used in Nazi extermination camp. In other words this is equivalent to saying that we should go shoot all the monkeys because they are the wrong, inferior to humans branch of evolution (Neoliberalism is fascism ). Compare with:
"[Slavs, Latin, and Hebrew immigrants are] human weeds ... a deadweight of human waste ... [Blacks, soldiers, and Jews are a] menace to the race." "Eugenic sterilization is an urgent need ... We must prevent multiplication of this bad stock." -- Margaret Sanger, April 1933 Birth Control Review .
As such this is an elitist ideology (see The Iron Law of Oligarchy ), kind of Revolt of the Elite against common folk (aka "shmucks", see Randism, an Americanized plagiarism of Nietzschean philosophy created by a Russian emigrant).
While completely based on deception and leading to impoverishment of lower 80% of population and shrinking of middle class, neoliberalism (as of 2015) still remains a powerful, dominant global ideology. Or more correctly a new secular religion (there is nothing scientific in neoliberal doctrine and very little in neoclassical economics, which like in case of Marxism serves as the cornerstone of his ideology). Since early 80th it became the dominant ideology in the world, which defeated and displaced both communism and social-democracy models.
It is important to stress that it is probably the first worldwide ideology based on deception in a sense that it pretends to provide benefits to all nations while in reality for all nations outside "first class nations" (G7 and a few others industrialized nations) it enforces neocolonial model of economic relations. It also operates with pseudoscientific concepts like "free market" that have tremendous propaganda value, serving as an opening door for neoliberalism into minds on many people. To disperse the smoke of this propaganda proved to be not that easy tasks, as it became self-sustainable providing wealth to Wall Street which trickle down small part of it to corrupt MSM. "Free market" propaganda even managed to survive the crash of neoliberal doctrine in 2008.
The essence of neoliberalism is redistribution of wealth up is also carefully hidden under the smoke screen. Neoliberalism in principle can't deliver prosperity for all, as the key idea is just the opposite. But revolt is suppressed by powerful propaganda machine as well as the raw military and technological power of the USA ("Lord protector" of neoliberalism) and speculation on human greed (which represents a variation of classic "divide and conquer" approach). It is difficult to define neoliberalism precisely but the restoration of unlimited power of financial oligarchy under smoke screen of "return to prosperity via accelerated development" is definitely its one of key features. And the level of unlimited unchecked power now is very similar it enjoyed at the beginning of XX century and which was destroyed by the Great Depression.
Another interesting deception used by neoliberalism is absolutize the value of competition in social systems. This is used as a smoke screen via an abstract, ideologically charged construct called "free market" (free for whom? why not "fair market" ?) . Simplifying you can see it as a power grab by globalized economic (and first of all financial) elite and a race to the bottom for the rest of world population. In this sense neoliberalism is not only about the redistribution of wealth up, toward the top 0.1%. It is also about putting the elite outside the framework of the law and institualizing fraud and deception as a business model for elite (and only for elite). Much like in feudalism neoliberal lords stand above the law. This ability of the elite to commit criminal acts with impunity is the key component of neoliberalism as a political system (which 2008 events aptly demonstrated to the world)
Color revolutions is a new method of warfare modeled after Trotsky idea of Permanent revolution. The most interesting part is that is can be used within the society as it uses existing democratic mechanisms to bring to power desired set of political actors. The key idea is undermining the society from within, by introducing a Trojan horse into it. Among mechanisms used are:
The number of corporations with public affairs offices in Washington grew from 100 in 1968 to over 500 in 1978. In 1971, only 175 firms had registered lobbyists in Washington, but by 1982, nearly 2,500 did. The number of corporate PACs increased from under 300 in 1976 to over 1,200 by the middle of 1980.[5] On every dimension of corporate political activity, the numbers reveal a dramatic, rapid mobilization of business resources in the mid-1970s.
What the numbers alone cannot show is something of potentially even greater significance: Employers learned how to work together to achieve shared political goals. As members of coalitions, firms could mobilize more proactively and on a much broader front. Corporate leaders became advocates not just for the narrow interests of their firms but also for the shared interests of business as a whole. ( The Powell Memo A Call-to-Arms for Corporations BillMoyers.com)
The typical for corporatism union of corporate power and government was in case of the USA transformed into a unique mix of corporatism and totalitarism which Sheldon Wolin called "inverted totalitarianism". Which is just another nickname for neoliberalism. Unlike traditional corporatism of Nazi Germany, and Italy the American neoliberal system is designed not to mobilize the populace, but to distract it, to encourage a sense of dependency. to achieve this goal a set of policies are instituted which include, but not limited to atomizing the society by cutting solidarity ties, cultivating fear, calling everything a "war" (claiming that the country is in some permanent, unwinnable war like "war on terror" -- the trick borrowed directly from Orwell 1984) as well as encouraging political disengagement (as in Reagan quote: "The nine most terrifying words in the English language are "I'm from the government, and I'm here to help." or Bush "Go shopping" recommendation after 9/11 .
Those dirty tricks allowed corporate elite to take full political power and kill remnants of trade unions political power while citizenry showed little interest or concern. In other words it was the powerful corporate interests which were the key promoters of neoliberalism and the key beneficiaries of its spread. They ingeniously used the Cold War as a pretext of dismantling of the New Deal ( Pt 1-8 Hedges & Wolin Can Capitalism and Democracy Coexist - YouTube):
HEDGES: And the Cold War. So the Cold War arises. And this becomes the kind of moment by which capital, and especially corporate capital, can dismantle the New Deal and free itself from any kind of regulation and constraint to deform and destroy American democracy. Can you talk about that process, what happened during that period?WOLIN: Well, I think the first thing to be said about it is the success with which the governing groups manage to create a Cold War that was really so total in its spread that it was hard to mount a critical opposition or to take a more detached view of our relationship to the Soviet Union and just what kind of problem it created.
And it also had the effect, of course, of skewing the way we looked at domestic discontents, domestic inequalities, and so on, because it was always easy to tar them with the brush of communism, so that the communism was just more than a regime. It was also a kind of total depiction of what was the threat to -- and complete opposite to our own form of society, our old form of economy and government.
HEDGES: And in Politics and Vision, you talk about because of that ideological clash, therefore any restriction of capitalism which was defined in opposition to communism as a kind of democratic good, if you want to use that word, was lifted in the name of the battle against communism, that it became capitalism that was juxtaposed to communism rather than democracy, and therefore this empowered capital, in a very pernicious way, to dismantle democratic institutions in the name of the war on communism.WOLIN: Oh, I think there's no question about that, the notion that you first had to, so to speak, unleash the great potential capitalism had for improving everybody's economical lot and the kind of constraints that had been developed not only by the New Deal, but by progressive movements throughout the 19th century and early 20th century in the United States, where it had been increasingly understood that while American economic institutions were a good thing, so to speak, and needed to be nurtured and developed, they also posed a threat.
They posed a threat because they tended to result in concentrations of power, concentrations of economic power that quickly translated themselves into political influence because of the inevitably porous nature of democratic representation and elections and rule, so that the difficulty's been there for a long time, been recognized for a long time, but we go through these periods of sleepwalking where we have to relearn lessons that have been known almost since the birth of the republic, or at least since the birth of Jeffersonian democracy, that capitalism has its virtues, but it has to be carefully, carefully watched, observed, and often controlled.
Later Wendy Brown, professor in Berkley advanced Professor Wolin ideas to a new level in her book Undoing the Demos: Neoliberalism's Stealth Revolution (Zone Books, 2015). Essentially she viewed neoliberalism as an internal color revolution, kind of coup d'état by part of the elite against New Deal. Notable quotes from her interview (What Exactly Is Neoliberalism):
"... I treat neoliberalism as a governing rationality through which everything is "economized" and in a very specific way: human beings become market actors and nothing but, every field of activity is seen as a market, and every entity (whether public or private, whether person, business, or state) is governed as a firm. Importantly, this is not simply a matter of extending commodification and monetization everywhere-that's the old Marxist depiction of capital's transformation of everyday life. Neoliberalism construes even non-wealth generating spheres-such as learning, dating, or exercising-in market terms, submits them to market metrics, and governs them with market techniques and practices. Above all, it casts people as human capital who must constantly tend to their own present and future value. ..."
"... The most common criticisms of neoliberalism, regarded solely as economic policy rather than as the broader phenomenon of a governing rationality, are that it generates and legitimates extreme inequalities of wealth and life conditions; that it leads to increasingly precarious and disposable populations; that it produces an unprecedented intimacy between capital (especially finance capital) and states, and thus permits domination of political life by capital; that it generates crass and even unethical commercialization of things rightly protected from markets, for example, babies, human organs, or endangered species or wilderness; that it privatizes public goods and thus eliminates shared and egalitarian access to them; and that it subjects states, societies, and individuals to the volatility and havoc of unregulated financial markets. ..."
"... with the neoliberal revolution that homo politicus is finally vanquished as a fundamental feature of being human and of democracy. Democracy requires that citizens be modestly oriented toward self-rule, not simply value enhancement, and that we understand our freedom as resting in such self-rule, not simply in market conduct. When this dimension of being human is extinguished, it takes with it the necessary energies, practices, and culture of democracy, as well as its very intelligibility. ..."
"... For most Marxists, neoliberalism emerges in the 1970s in response to capitalism's falling rate of profit; the shift of global economic gravity to OPEC, Asia, and other sites outside the West; and the dilution of class power generated by unions, redistributive welfare states, large and lazy corporations, and the expectations generated by educated democracies. From this perspective, neoliberalism is simply capitalism on steroids: a state and IMF-backed consolidation of class power aimed at releasing capital from regulatory and national constraints, and defanging all forms of popular solidarities, especially labor. ..."
"... The grains of truth in this analysis don't get at the fundamental transformation of social, cultural, and individual life brought about by neoliberal reason. They don't get at the ways that public institutions and services have not merely been outsourced but thoroughly recast as private goods for individual investment or consumption. And they don't get at the wholesale remaking of workplaces, schools, social life, and individuals. For that story, one has to track the dissemination of neoliberal economization through neoliberalism as a governing form of reason, not just a power grab by capital. There are many vehicles of this dissemination -- law, culture, and above all, the novel political-administrative form we have come to call governance. It is through governance practices that business models and metrics come to irrigate every crevice of society, circulating from investment banks to schools, from corporations to universities, from public agencies to the individual. It is through the replacement of democratic terms of law, participation, and justice with idioms of benchmarks, objectives, and buy-ins that governance dismantles democratic life while appearing only to instill it with "best practices." ..."
"... Progressives generally disparage Citizens United for having flooded the American electoral process with corporate money on the basis of tortured First Amendment reasoning that treats corporations as persons. However, a careful reading of the majority decision also reveals precisely the thoroughgoing economization of the terms and practices of democracy we have been talking about. In the majority opinion, electoral campaigns are cast as "political marketplaces," just as ideas are cast as freely circulating in a market where the only potential interference arises from restrictions on producers and consumers of ideas-who may speak and who may listen or judge. Thus, Justice Kennedy's insistence on the fundamental neoliberal principle that these marketplaces should be unregulated paves the way for overturning a century of campaign finance law aimed at modestly restricting the power of money in politics. Moreover, in the decision, political speech itself is rendered as a kind of capital right, functioning largely to advance the position of its bearer, whether that bearer is human capital, corporate capital, or finance capital. This understanding of political speech replaces the idea of democratic political speech as a vital (if potentially monopolizable and corruptible) medium for public deliberation and persuasion. ..."
"... My point was that democracy is really reduced to a whisper in the Euro-Atlantic nations today. Even Alan Greenspan says that elections don't much matter much because, "thanks to globalization . . . the world is governed by market forces," not elected representatives. ..."
As I mentioned above an interesting tactical step of the wizards behind the screen of the
neoliberal revolution was creating and nurturing the powerful and influential intellectual "fifth column"
inside the country. In case of the USA it was done mainly by lavish financial of "appropriate" think
tanks as well as bribing the economic departments of the universities (this was the point when salaries
of professors of economic shoot up while salaries of professors in other department stagnated).
If the outcome is so different from our aims -- if, instead of freedom and prosperity,
bondage and misery stares us in the face -- is it not clear that sinister forces must have foiled
our intentions, that we are the victims of some evil power which must be conquered before we can
resume the road to better things?
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Neoliberalism is more than a set of economic policies based on absolutization of the value of the market and attempt to view everything in market categories. As a form of reason developed into a governing rationality, it converts every aspect of contemporary existence into a market framework. All human conduct for neoliberalism is a economic behavior, a market conduct. In other words under neoliberal ideology market is the ultimate for of human relations and should encompass all spheres of existence.
Like was previously the case of Communism/Bolshevism/Trotskyism a distinguishing feature of neoliberal ideology is establishment of a new "neoliberal rationality" and religious believe in its inevitability with the clincher argument pioneered by Margaret Thatcher: “there is no alternative”(TINA). That makes neoliberal a pretty radical ideology which serves the base of radicalized movement. In some respects this movement can compete not only with the Communist Party of the soviet Union (CPSU) but also with Taliban.
As Lars Cornelissen noted "In this sense Friedrich Hayek’s The Road to Serfdom is today, above all else, a testimony to irony. The book is punctuated with frightening images of lives reduced to unfreedom, people seen the Greek god of satire and irony, himself ordained it, The Road to Serfdom has turned to be the first cobblestone in the rod to neoliberal serfdom. Everything Hayek expected socialism would bring has seemingly come true under a regime he himself helped lay the theoretical foundations for -- a fact all the more ironic because Keynesianism, for all its flaws, never led to the totalitarian regime Hayek claimed it would." (criticalstudies.org.uk)
Instead of Communist manifesto neoliberals use so called Washington Consensus and instead of Capital Milton's Friedman book Capitalism as Freedom. They also re-define the meaning of the word "freedom" (Deconstructing neoliberalism's definition of 'freedom'). Instead Roosevelt classic four freedoms, they put as the cornerstone the corner cult of possessions (see also Ayn Rand and her Objectivism Cult). That makes neoliberalism as powerful extremist ideology as communism, or radical Islam, if you wish ;-). Because of its ideological extremism: it recognizes no competitors, and allows its adherents ignore the possibility of viable alternatives. The extremist, jingoistic wing of neoliberals in the USA is represented by so called neoconservatives (Paul Wolfowitz, Bush Jr.’s Deputy Secretary of Defense even managed to became the President of the World Bank, confirming the idea that finance is a war by other means) . Since Clinton the position of Secretary of State is occupied by warmongering female neocons, with Hillary Clinton as the most recent example
For thousand years various religions attempted to suppress the excessive greed in men, as this is a prerequisite for stability and functioning of society. In this respect neoliberalism is really Devil Creed as it consider greed to be a virtue ("greed is good"). In other words from the point of view of Christian theology neoliberalism is nothing but a flavor of Satanism (Wikipedia):
Its core beliefs revolves around individualism, egotism, Epicureanism, self-deification and self-preservation, and propagate a worldview of natural law, materialism, Social Darwinism, Lex Talionis ("eye for an eye"), and mankind as animals"
... ... ...
It is atheistic philosophy which asserts that "each individual is his or her own god and there isno room for any other God. "
Neoliberalism explicitly rejects the key ideas of Christianity -- the idea of ultimate justice for all sinners. The idea that a human being should struggle to create justice in this world while realizing that the ultimate solution is beyond his grasp.
As Reinhold Niebuhr noted a world where there is one center of power and authority (financial oligarchy under neoliberalism) "preponderant and unchallenged... its world rule almost certainly violate basic standard of justice". The same is true about globalization as
"no world government could possibly possess for generations to come, the moral and political authority to redistribute power between nations to the degree in which highly cohesive national communities have accomplished this end in recent centuries".
He warned that
"Lacking a deep understanding of the complexities of national aspirations and cultural differences, US foreign policy often lingers between two extremes of offering economic advantage to secure cooperation or overcoming intransigence through military force".
The problem with "greed is good" slogan it cultivates cruelty toward other people, As Pope Francis noted "To sustain a lifestyle which excludes others ... a globalization of indifference has developed. Almost without being aware of it, we end up being incapable of feeling compassion ..."
Here are selected quotes from Evangelii Gaudium, Apostolic Exhortation of Pope Francis, 2013 (see also Pope Francis on danger of neoliberalism)
... Such an [neoliberal] economy kills. How can it be that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points? This is a case of exclusion. Can we continue to stand by when food is thrown away while people are starving? This is a case of inequality. Today everything comes under the laws of competition and the survival of the fittest, where the powerful feed upon the powerless. As a consequence, masses of people find themselves excluded and marginalized: without work, without possibilities, without any means of escape.
Human beings are themselves considered consumer goods to be used and then discarded. We have created a “disposable” culture which is now spreading. It is no longer simply about exploitation and oppression, but something new. Exclusion ultimately has to do with what it means to be a part of the society in which we live; those excluded are no longer society’s underside or its fringes or its disenfranchised – they are no longer even a part of it. The excluded are not the “exploited” but the outcast, the “leftovers”.
54. In this context, some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system. Meanwhile, the excluded are still waiting. To sustain a lifestyle which excludes others, or to sustain enthusiasm for that selfish ideal, a globalization of indifference has developed.
Almost without being aware of it, we end up being incapable of feeling compassion at the outcry of the poor, weeping for other people’s pain, and feeling a need to help them, as though all this were someone else’s responsibility and not our own. The culture of prosperity deadens us; we are thrilled if the market offers us something new to purchase; and in the meantime all those lives stunted for lack of opportunity seem a mere spectacle; they fail to move us.
No to the new idolatry of money
55. One cause of this situation is found in our relationship with money, since we calmly accept its dominion over ourselves and our societies. The current financial crisis can make us overlook the fact that it originated in a profound human crisis: the denial of the primacy of the human person! We have created new idols. The worship of the ancient golden calf (cf. Ex 32:1-35) has returned in a new and ruthless guise in the idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose. The worldwide crisis affecting finance and the economy lays bare their imbalances and, above all, their lack of real concern for human beings; man is reduced to one of his needs alone: consumption.
56. While the earnings of a minority are growing exponentially, so too is the gap separating the majority from the prosperity enjoyed by those happy few. This imbalance is the result of ideologies which defend the absolute autonomy of the marketplace and financial speculation. Consequently, they reject the right of states, charged with vigilance for the common good, to exercise any form of control. A new tyranny is thus born, invisible and often virtual, which unilaterally and relentlessly imposes its own laws and rules. Debt and the accumulation of interest also make it difficult for countries to realize the potential of their own economies and keep citizens from enjoying their real purchasing power. To all this we can add widespread corruption and self-serving tax evasion, which have taken on worldwide dimensions. The thirst for power and possessions knows no limits. In this system, which tends to devour everything which stands in the way of increased profits, whatever is fragile, like the environment, is defenseless before the interests of a deified market, which become the only rule.
No to a financial system which rules rather than serves
57. Behind this attitude lurks a rejection of ethics and a rejection of God. Ethics has come to be viewed with a certain scornful derision. It is seen as counterproductive, too human, because it makes money and power relative. It is felt to be a threat, since it condemns the manipulation and debasement of the person. In effect, ethics leads to a God who calls for a committed response which is outside of the categories of the marketplace. When these latter are absolutized, God can only be seen as uncontrollable, unmanageable, even dangerous, since he calls human beings to their full realization and to freedom from all forms of enslavement. Ethics – a non-ideological ethics – would make it possible to bring about balance and a more humane social order. With this in mind, I encourage financial experts and political leaders to ponder the words of one of the sages of antiquity: “Not to share one’s wealth with the poor is to steal from them and to take away their livelihood. It is not our own goods which we hold, but theirs”.[55]
58. A financial reform open to such ethical considerations would require a vigorous change of approach on the part of political leaders. I urge them to face this challenge with determination and an eye to the future, while not ignoring, of course, the specifics of each case. Money must serve, not rule! The Pope loves everyone, rich and poor alike, but he is obliged in the name of Christ to remind all that the rich must help, respect and promote the poor. I exhort you to generous solidarity and a return of economics and finance to an ethical approach which favors human beings.
No to the inequality which spawns violence
59. Today in many places we hear a call for greater security. But until exclusion and inequality in society and between peoples is reversed, it will be impossible to eliminate violence. The poor and the poorer peoples are accused of violence, yet without equal opportunities the different forms of aggression and conflict will find a fertile terrain for growth and eventually explode. When a society – whether local, national or global – is willing to leave a part of itself on the fringes, no political programmes or resources spent on law enforcement or surveillance systems can indefinitely guarantee tranquility. This is not the case simply because inequality provokes a violent reaction from those excluded from the system, but because the socioeconomic system is unjust at its root. Just as goodness tends to spread, the toleration of evil, which is injustice, tends to expand its baneful influence and quietly to undermine any political and social system, no matter how solid it may appear. If every action has its consequences, an evil embedded in the structures of a society has a constant potential for disintegration and death. It is evil crystallized in unjust social structures, which cannot be the basis of hope for a better future. We are far from the so-called “end of history”, since the conditions for a sustainable and peaceful development have not yet been adequately articulated and realized.
60. Today’s economic mechanisms promote inordinate consumption, yet it is evident that unbridled consumerism combined with inequality proves doubly damaging to the social fabric. Inequality eventually engenders a violence which recourse to arms cannot and never will be able to resolve. This serves only to offer false hopes to those clamouring for heightened security, even though nowadays we know that weapons and violence, rather than providing solutions, create new and more serious conflicts. Some simply content themselves with blaming the poor and the poorer countries themselves for their troubles; indulging in unwarranted generalizations, they claim that the solution is an “education” that would tranquilize them, making them tame and harmless. All this becomes even more exasperating for the marginalized in the light of the widespread and deeply rooted corruption found in many countries – in their governments, businesses and institutions – whatever the political ideology of their leaders.
"Poverty wants much; but greed wants everything."
Publilius Syrus
Historically neoliberalism emerged as an ideology of the financial elite, specifically as the ideology of financial revanchism. It was custom made to serve their need and in its origin there is a certain analogy with Marxism, with Mont Pelerin Society serving as a "party" that created and advanced this ideology ( Everything You Need to Know about Laissez-Faire Economics):
DSW: Please give me a thumbnail history of the Mont Pelerin Society and the role it played in advancing economic theory and policy. So this would be Hayek, Friedman and all that.
AK: The great hero of that society was Hayek. He had a different position from Walras & company and he wasn't very consistent in his views. According to Hayek, Walras said that nobody influences prices but take prices as given, and then somebody, not specified, adjusts them until they get to equilibrium. There is some mechanism out there. That was Walras. Hayek said "Not at all!" He said -- actually he was a horrid man.
DSW: Wait a minute! Why was he a horrid man? You can't just glide over that!
AK: The reason I say that is-he had very clever ideas -- but he was extremely bigoted, he was racist. There is a wonderful interview with him that you can find on You Tube, where he says (imitating Hayek's accent) "I am not a racist! People accuse me of being a racist. Now it's true that some of the Indian students at the London School of Economics behave in a very nasty way, typical of Indian people…" and he carries on like this. So that's one reason he is horrid. A second thing is that if you don't believe he is horrid, David, I will send you his book The Road to Serfdom, which said that if there is any planning going on in the economy, it will inevitably lead you to a fascist situation. When he produced that book it had a big success, particularly in the United States, and what is more, he authorized a comic book version of it, which is absolutely dreadful. One Nobel Prize winner, [Ronald] Coase, said "you are carrying on so much against central planning, you forget that a large part of our economy is actually governed by centrally planned institutions, i.e., big firms, and these big firms are doing exactly what you say they can't do. Hayek shrugged that off, but what he did in his book was say that if any planning goes on then eventually you are all going to wind up in a fascist state where you'll be shot if you don't do what you're told to do. At the end of the book there is some poor guy who's being shot because he wants to be a carpenter or a plumber, or something like that. It's terrible! And the irony of the whole situation is that comic book was issued and financed by General Motors, and GM of course is one of those corporations that Hayek didn't see were centrally planned institutions. That's way I say that Hayek was a dreadful person.
Hayek's idea was, there is no way that people could know what was going on and could know what the prices of goods are. Everyone has a little piece of information of their own, and in acting upon it, this news gets out into the market. So, for example I buy something such as a share, and you say "Oh, Kirman bought a share, so something must be going on there, based on information that he had that I didn't have", and so forth. Hayek's idea was that this mechanism-people watching each other and getting information from their acts, would lead you to the equilibrium that would be a socially optimal state. But again, he never specified closely what the mechanism was. He has little examples, such as one about shortage of tin and how people would adjust, but never really specified the mechanism. He believed that people with little information of their own, like ants, would somehow collectively get it right. It was a very different view of the world than Walras.
DSW: So he was a pioneer in two respects. First of all, he grasped the idea of self-organizing and decentralized processes-that the intelligence is in the system, not in any individual, and secondly cultural group selection, that the reason economic systems were like this is because of some past history of better systems replacing worse systems. The wisdom of the system was the product of cultural group selection, as we would put it today, and that we shouldn't question its wisdom by tampering with it. Is that a fair thing to say?
AK: Yes, that's a fair thing to say and I think it is what Hayek believed. He didn't actually show how it would happen but you're absolutely right -- I think that's what he believed and he thought tampering with this system would make it less perfect and work less well, so just leave it alone. I don't think he had in mind, strictly speaking, group-level selection, but that's clearly his idea. A system that works well will eventually come to outstrip other systems. That's why he was advising Thatcher. Just trust the markets and let things go. Get rid of the unions, and so forth. So it's clearly he had in mind that interfering with that system would just lead you to a worse social situation. He was much less naïve than Friedman. Friedman has a primitive natural selection argument that if firms aren't doing better than other firms they'll go bust and just die. That's a summary of Friedman's evolutionary argument! But Hayek is much more sophisticated-you're absolutely right.
DSW: I think Hayek was explicit about cultural group selection, and Friedman -- I've paid quite a bit of attention to his 1953 article on positive economics, in which he makes a very naïve evolutionary argument. Friedman and Hayek didn't see eye to eye at all, as I understand it. Hayek was actually very concerned that Friedman and other mathematical economists took over the Mont Pelerin Society, if I understand it correctly, but now let's put Friedman on center stage, and also the society as a whole and the creation of all the think tanks, which caused the society to become politically influential.
AK: Yes, I think that it coincided very nicely with conservative ideology and people who had really strongly liberal -- not in the Mills sense (you have to make this distinction particularly in the United States where these words have different meanings), but really completely free market "leave-everybody-to-their-own-thing" libertarian point of view. Those people found it a wonderful place to gather and reinforce themselves. And Hayek was a strong member of that. Another was Gary Becker, but I don't know how directly. Becker had the economics of everything-divorce, whatever. You'd have these simple arguments, but not necessarily selection arguments, often some sort of justification in terms of a superior arrangement. The marginal utility of the woman getting divorced just has to equal the marginal utility of not getting divorced and that would be the price of getting divorced, and that sort of stuff. Adam Smith would have rolled over in this grave because he believed emotions played a strong role in all of this and the emotions that you have during divorce don't tie into these strict calculations.
DSW: This is a tailor-made ideology for powerful interests, powerful people and corporations who simply do want to have their way. Is that a false statement to make?
AK: No, I think that's absolutely right. They can benefit from using that argument to advance their own ends. As someone once said, if you think of saying to firms, we're going to diminish their taxes, no firm in its right mind would argue with that. Even though they might think deep down that there are other things that could be done for society. There are some things which are part of this philosophy which is perfect for firms and powerful interest groups. You're absolutely right. And so they lobby for this all the time, pushing for these positions that are in fact in their own interest.
DSW: So, at the end of the day, "Greed is Good" sounds so simplistic, but what all of this seems to do is to provide some moral justification for individuals or corporations to pursue their own interests with a clear conscience. It's a moral justification for "Greed is Good", despite all of the complexities and all of the mathematics -- that's what it seems to come down to. Am I wrong about that?
AK: I think you're absolutely right. What's interesting is that if you look at various economic situations, like today the first thing that people tell you about the Greeks is that they are horrid ideological people. But the people on the other side have an equally strong ideology, which is being justified by the sort of economic models that we are building. Remember that even though we had this discussion about how this became a real difficulty in theoretical economics, in macroeconomics they simply carried on as if these theoretical difficulties hadn't happened. Macroeconomic models are still all about equilibria, don't worry about how we got them, and their nice efficient properties, and so forth. They are nothing to do with distribution and nothing to do with disequilibrium. Two big strands of thought-Keynes and all the people who work on disequilibrium-they're just out of it. We're still working as if underlying all of this, greed -- we don't want to call it greed, but something like greed -- is good.
DSW: Could I ask about Ayn Rand and what role she played, if any? On the one hand she was not an economist, she was just a philosopher and novelist. On the other hand, she is right up there in the pantheon of free market deities alone with Smith, Hayek and Friedman. Do you ever think about Ayn Rand. Does any economist think about Ayn Rand?
AK: That's an example of my narrowness that I never read Ayn Rand, I just read about her. I think it would be unfair now to make any comments about that because I'd be as uninformed as some people who talk about Adam Smith. What I should do at some point is read some of her work, because she is constantly being cited on both sides as a dark bad figure or as a heroine in the pantheon as you said, with Hayek and everybody else. I just admit my ignorance and I don't know if Rand had a serious position on her own or whether she is being cited as a more popular and easily accessible figure.
DSW: Fine! I'd like to wrap this up with two questions. This has been a wonderful conversation, by the way. Nowadays, you hear all the time about how neoliberal ideology and thought is invading European countries and is undoing forms of governance that are actually working quite well. I work a lot in Norway and Scandinavia and there you hear all the time that Nordic model works and at the same time it is being corrupted by the neoliberal ideology, which is being spread in some sort of cancerous fashion. Please comment on that-Current neoliberalism. What justifies it? Is it spreading? Is that a good thing or a bad thing? Anything you would like to say on that topic.
AK: I think that one obsession that economists have is with efficiency. We're always, always, worrying about efficiency. People like to say that this is efficient or not efficient. The argument is, we know that if you free up markets you get a more efficient allocation of resources. That obsession with efficiency has led us to say that we must remove some of these restraints and restrictions and this sort of social aid that is built into the Scandinavian model. I think that's without thinking carefully about the consequences. Let me tell you my favorite and probably not very funny story about how economists are obsessed with efficiency. There were three people playing golf; a priest, a psychoanalyst, and an economist. The got very upset because the guy in front was playing extremely slowly and he had a caddy to help him. So these guys get very upset and they start to shout and say "Come on, can we play through please! You can't waste all of our afternoon!" They sent the priest up to find out what was going on and he came back absolutely crestfallen and said "You know why that poor guy is laying so slowly? It's because he's blind. I'm so upset because every Sunday I'm preaching to people to be nice to others." He turns to his psychoanalyst friend and say's "Joe, what do you think?" Joe says "I have these guys on my coach every week. I'm trying to help them live with this problem and here I am screaming at this guy. It's horrible!" Then they turn to the economist and say "Fred, what do you think?" Fred says "I think that this situation is totally inefficient. This guy should play at night!" As you can see, this is a very different attitude to how the world works.
I think what has happened is, because of this mythology about totally free markets being efficient, we push for that all the time and in so doing, we started to do things like-for example, we hear all the time that we have to reform labor markets in Europe. Why do we want to reform them? Because then they'll be more competitive. You can reduce unit labor costs, which usually means reducing wages. But that has all sorts of consequences, which are not perceived. In model that is more complex, that sort of arrangement wouldn't necessarily be one that in your terms would be selected for. When you do that, you make many people temporary workers. You have complete ease in hiring and firing so that people are shifting jobs all the time. When they do that, we know that employers then invest nothing in their human capital. When you have a guy who may disappear tomorrow-and we have a lot of these temporary agencies now in Europe–which send you people when you need them and take away people when you don't. Employers don't spend anything on human capital. We're reducing the overall human capital in society by having an arrangement like that. If you're working for Toyota, Toyota knows pretty much that you'll be working all your lifetime, so they probably invest quite a lot in you. They make you work hard for that, but nevertheless it is a much more stable arrangement. Again, the idea that people who are out of work have chosen to be out of work and by giving them a social cushion you induce them to be out of work-that simply doesn't fit with the facts. I think that all the ramification of these measures-the side effects and external effects-all of that gets left out and we have this very simple framework that says "to be competitive, you just have to free everything up." That's what undermining the European system. European and Scandinavian systems work pretty well. Unemployment is not that high in the Scandinavian system. It may be a little bit less efficient but it may also be a society where people are a little bit more at ease with themselves, than they are in a society where they are constantly worrying about what will happen to them next. The last remark I would make is that to say "you've got to get rid of all those rules and regulations you have"-in general, those rules and regulations are there for a reason. Again, to use an evolutionary argument, they didn't just appear, they got selected for. We put them in place because there was some problem, so just to remove them without thinking about why they are there doesn't make a lot of sense.
DSW: Right, but at the same time, a regulation is a like a mutation: for every one that's beneficial there are a hundred that are deleterious. So…
AK: You are an American, deep at heart! You believe that all these regulations are dreadful. Think of regulations about not allowing people to work too near a chain saw that's going full blast, or not being allowed to work with asbestos and so forth. Those rules, I think, have a reason to be there.
DSW: Well of course, but just to make my position clear, the idea of no regulations is absurd. For a system that is basically well adapted to its environment, then most of its regulations are there for a reason, as you say, but one of the things that everyone needs to know about evolution is that a lot of junk accumulates. There is junk DNA and there is junk regulations. Not every regulation has a purpose just because it's there, and when it comes to adapting to the future, that's a matter of new regulations and picking the right one out of many that are wrong. The question would be, how do you create smart regulations? Knowing that you need regulations, how do you create smart ones? That's our challenge and the challenge of someone who appreciates complexity, as you do. How would you respond to that?
AK: I think you're absolutely right. It's absolutely clear that as these regulations accumulate, they weren't developed in harmony with each other, so you often get even contradictory regulations. Every now and then, simplifying them is hugely beneficial. But that doesn't mean getting rid of regulations in general. It means somehow managing to choose between them, and that's not necessarily a natural process. For example, in France when I arrived here it used to take about a day and a half to make my tax return. Now it takes around about 20 minutes, because some sensible guy realized that you could simplify this whole thing and you could put a lot of stuff already into the form which they have received. They have a lot of information from your employer and so forth. They've simplified it to a point where it takes me about 20 minutes a year to do my tax return. It used to take a huge amount of time.
DSW: Nice!
AK: What's interesting is that you have some intelligent person saying "let's look at this and see if we can't make these rules much simpler, and they did. I have conflicting views, like you. These things are usually there for a reason, so you shouldn't just throw them away, but how do you select between them. I don't think that they necessarily select themselves out.
DSW: I would amend what you said. You said that some intelligent person figured out how to make the tax system work better in France. Probably not just a single intelligent person. Probably it was an intelligent process, which included intelligent people, but I think that gets us back to the idea that we need systemic processes to evaluate and select so that we become adaptable systems. But that will be systemic thing, not a smart individual.
AK: You're absolutely right. I shouldn't have said smart individual because what surely happened was that there was a lot of pressure on the people who handle all of these things, and gradually together they realized that this situation was becoming one where their work was becoming almost impossible to achieve in the time available. So there was some collective pressure that led them to form committees and things that thought about this and got it together. So it was a natural process of a system, but it wasn't the rules themselves that selected themselves out, as it were. It was the collectivity that evolved in that way to make it simpler.
DSW: There's no invisible hand to save the day.
AK: (laughs). Joe Stiglitz used to say that we also need a visible hand. The visible hand is sometimes pretty useful. For example in the financial sector I think you really need a visible hand and not an invisible hand.
As David Harvey noted in his book A brief History of Neoliberalism:
Redistributive effects and increasing social inequality have in fact been such a persistent feature of neoliberalization as to be regarded as structural to the whole project. Gérard Duménil and Dominique Lévy, after careful reconstruction of the data, have concluded that neoliberalization was from the very beginning a project to achieve the restoration of class power. (Chapter 1)
It is an ideology completely based on deception. The set of lies that constitute the fundament of neoliberal ideology were brought to light as a band aid during the crisis of state capitalism in 70th. It also pretended to produce "heaven on earth" (and in this case is similar to communism). the only difference is that neoliberal promise heaven only "chosen" only, and "good life" for everybody else (pretending that it will lead to lifting standard of living for everybody, while making few obscenely rich). This mode of thinking is called supply side economy or "trickle-down economy". As John Kenneth Galbraith aptly noted that “Trickle-down theory - the less than elegant metaphor that if one feeds the horse enough oats, some will pass through to the road for the sparrows.”
If socialism absolulitized the power of state, neoliberalism fall into another extreme (and remember that extremes meet). It absolutize the "market" (understood as freedom of financial oligarchy to do what they want) and the law of jungle in competition (which means unconditional surrender of all power to the largest transnationals and first of all banks and rape and plunder of smaller firms and states, probably more fierce then under any form of state capitalism). But neoliberal pretences of minimizing the state is another deception. They want to minimize only those branches of state that control behaviour of capitalists, while increasing dramatically repressive power of state to prevent any possibility of revolt. In other words neoliberalism logically lead to creation of national security state, the development which we observe in several countries, but first of all in the USA and Great Britain. In this sense neoliberalism can be viewed as one of the modern flavors of neofascism.
It was a false, misleading and pretty seductive ideology from the very beginning created with a specific goal to deceive by people who can be called intellectual criminals. The most interesting part of neoliberalism is that the whole ideology was custom created for particular political goals of financial elite, which managed to hire stooges like Milton Friedman and others to accomplish the task.
So one of the most interesting features of neoliberalism is that it was custom tailored for restoration of power of financial elite, or, as they are called after 2008, for banksters. But it proved to be more relevant and long lasting then band aid covering post New Deal financial revanchism of banksters, acquiring a life of its own.
Gradually it became full fledged ideology, much like Marxism before (and it did borrowed a lot from Marxism, especially from Trotskyism, and first of all the idea that politically organized minority can always dictate its will to unorganized majority as well as "permanent revolution" memo (concertized into 'export democracy" instead of "liberation from capitalism oppression and in a very slick way replacing uprising of "proletarian" with uprising of fifth column specifically organized and financed to accomplish a "color revolution". In both case criminal elements are welcomed (especially in the form of football fanatics). In both cases the preliminary phase was creation or establishing control over the sizable part of MSM (in modern days that included TV channels, not only newspapers like in classic Marxism). Role of Communist International emissaries was adopted by staff of the US embassies. The goal is also the same in both case -- violent acquisition of power of the new elite by whatever means possible.
Like Marxist political economy, neoliberalism has certain economic postulates (see "Washington Consensus"). As a philosophy is oscillating between atheistic Satanism ("greed is good"), Randism ("cult of entrepreneurships", "Entrepreneurs aka "creative class" as Ubermench") and post modernism ("rejection of absolute truth").
In 80th in the USA it essentially became a new "secular religion" for the elite, shredding remnants of Christian morality. As foundations of neoliberalism such as neoclassical economy and Trotskyism are disconnected from the reality, both requires from the followers blind, unquestioned obedience like in high demand cults. But remuneration under neoliberalism to top echelon of functionaries is much better ;-) While in both case a good money are paid for the top layer of the sect, under neoliberalism the pay acquired obscene levels; that actually includes paid stooges in economic department which were bough "en mass". Bribes in a form of fees for "lectures" reach a several hundred thousand dollars).
It is difficult to define neoliberalism more precisely but the restoration of unlimited power of financial oligarchy is definitely its one of key features. The same level of unlimited unchecked power it enjoyed at the beginning of XX century and which was destroyed by the Great Depression.
As such the neoliberal project has multiple dimensions all of which are supported by a hypertrophied, intrusive spying apparatus of neoliberal state which reminds the Third Reich with the aggressive, militarized police. A combination which make protests or, god forbid revolt against neoliberalism much more difficult.
As the latest stage of predatory capitalism, neoliberalism is part of a broader economic and political project of restoring class power and consolidating the rapid concentration of capital, particularly financial capital (Giroux 2008; 2014). In his article “Protesting Youth in the Age of Neoliberal Cruelty”, Professor Henry A. Giroux points out that like communism, neoliberalism can be viewed in three principal dimensions -- political, ideological and cultural.
As a political project, it includes clearly defined economic-political goals such as “the deregulation of finance, privatization of public services, elimination and curtailment of social welfare programs, open attacks on unions, and routine violations of labor laws” (Yates 2013). There two facet of achieving this goal
Aggressive, imperial foreign policy of promoting globalization under the leadership of the USA as the new world center of power, similar to Kremlin role in Communist International. This is a project in which the interests of the West and global corporate oligarchy in general (but first of all the US financial oligarchy) are put ahead of the interests of average citizens, especially Untermensch (consuming humans) in developing countries and xUSSR area. For them holding full time job is no longer is a way out of poverty. most poor in those countries have full time jobs, "aka working poor"). To amplify this trend to a new incarnation of feudalism we got the Trans Pacific Partnership, which like previously NAFTA, cement the role of third and second world countries as supplies of cheap natural resources to the first world countries. It institualize the US policy of attacking countries either by direct military intervention or via color revolution. Mainly countries that reject of question neoliberal ideology, role of the dollar as world currency and/or attempt to undermine the US global economic and political hegemony (Iraq, Iran, Libya, Russia).
It upholds the irrational belief that the market can both solve all problems and serve as a model for structuring all social relations. As a mode of governance, it produces identities, subjects, and ways of life driven by a survival-of-the fittest ethic, grounded in the idea that any free, driven and possessive individual has the right to exercise his market power removed from matters of ethics and social costs.
The central ideological postulate of neoliberalism is very close to Marxism. While in Marxism it is proletariat that is driving force of history in modern time, in neoliberalism that driving force is represented by an equally a phony idea of the self-regulating market. "Free Market" (which for large corporation means free from supervision) was promoted as a universal force of good able to solve all the problems in particular contract with incompetent, arrogant public services. "The private" sector was portrayed as some "zone of efficiency" (which is a complete nonsense for anybody who worked at large transactional corporation and, better, several of them. ).
The stress is on granting political power (in any country of the globe) to "highly efficient" mostly USA global corporations, despite of long history of abuse, using child labor, abysmal working conditions and ruthless suppression of workers in third world countries. As well as a proven ability to manufacture second rate goods (the USA cars before, say, 2008).
Paradoxically this neoliberal idea of market efficiency also included banks and other financial institutions.
Neoliberalism looks like a seductive cult which is based on playing on people's greed, so it a sense it is an anti-religion or a flavor of Satanism. It is actually the wrong answer to all problems it is trying to solve. It promotes blatant, unlimited exploitation of people under the slogan that customers are supposedly free to accept of refuse goods and services and workers are free to accept of reject jobs.
There were a lot of hypocrisy in how neoliberalism was sold to poor third world countries and how it was implemented in the USA. Actually during "neoliberal" period of USA the share of government in GDP rose from 30 to 40%.
That does not mean that market are not a viable economic mechanism. It just means that like
centralized distribution markets have their own limitations that need to be studies and excesses
carefully regulated. Weakening of regulation in this sense put the whole society at risk.
The real goal of neoliberalism is re-distribution of power and related redistribution of wealth up id a true feudal fashion. That's why neoliberalism also can be called neo-feudalism (which is another similarity with Bolsheviks and USSR) The neoliberal project is really about weakening the power of middle class and impoverishing everybody other then top 20% of population in favor of maximizing the power of the tiny elite (the top 0.1%).
As such, neoliberalism is a broad strategy of economic (and first of all financial), political, cultural and military elites to destroy social-democratic state and to restructure power relationships, institutions, by injecting into the society, like narcotic, an artificial and a priory false ideology (civil religion), which is extremely beneficial for the promotion of interests of the top 0.1% (aka "super-elite", represented mainly by financial oligarchy both in the US and in in other countries; in the latter they represent the fifth column of neoliberal globalization).
Marx famous phase "Religion is the opium of the people" here acquires different and more modern and more menacing context as neoliberal dogma really serve the role of opium. And the way it is distributed strongly reminds opium wars of British empire. The full quote from Karl Marx translates as: "Religion is the sigh of the oppressed creature, the heart of a heartless world, and the soul of soulless conditions. It is the opium of the people".
Like communism before, it is an ideology with its own international movement. If the slogan of Communist International (aka Comintern) was "workers of all countries unite" the slogan of neoliberal revolution are both "Elites of all countries unite" and "viva the law of jungles" or "if you see that guy who is ready to fall push him in the back". Of course with the appropriate PR smoke screen about free markets, freedom, democracy and equal opportunity.
Like Marxism neoliberal ideology is the ideology of class hegemony (just for a different class ;-), which serves multiple roles
"...they are creating a society in which they can commit hugely damaging economic crimes with impunity, and in which only children of the wealthy have the opportunity to become successful.That’s what I have a problem with. And I think most people agree with me."
Neoliberalism created a new type of extremely greedy and reckless oligarchy, which to certain extent can't stop looting event under the danger Robert Johnson on Oligarchy at Culture Project's IMPACT 2012 Festival. Kind of new type of psychopaths.
The key element of those efforts is hijacking national media by Western interests and creating "media fifth column". This very interesting strategy of media domination looks very similar to the goal of achieving air supremacy in the conventional war. It is extremely powerful force for suppressing and demoralizing of the forces of the opponent. A very interesting example of such destabilization and subsequent coup d'état was recent EuroMaidan color revolution in Ukraine, where the level of brainwashing of population reached such an unprecedented level that people were acting against their major economic interests and essentially destroyed the state, inflicting economic misery and later the civil war. The trick somewhat similar to described in What's the matter with Kansas
Some authors define neoliberalism differently. For example, Robert McChesney, defines neoliberalism as an economic paradigm that leaves a small number of private parties in control and able to maximize their profit at the expense of the other smaller players and the rest of population. It posits that business domination of society proceeds most effectively when there is a representative democracy along with a weak and ineffectual polity typified by high degrees of depoliticization, especially among the poor and working class. He notes that unlike in classic corporatism, which relies on mass mobilization, neoliberalism relies on the opposite trend (along the lines of "inverted totalitarism"): a distracted or apathetic or depoliticized public essentially "goes along" with this, using the dominance of consumerism as a Trojan horse of depolitization and the loss of community spirit("Bread and circuses"). In sum, neoliberalism is the immediate and foremost enemy of genuine participatory democracy, not just in the United States but across the planet, and will be for the foreseeable future. Globalization is the result of powerful governments, especially that of the United States, pushing trade deals and other accords down the throats of the world's people to make it easier for corporations and the wealthy to dominate the economies of nations around the world without having obligations to the peoples of those nations
This stress of depolitization is very important. It proved to be as efficient as mass mobilization of classic corporatism and achieve the same purposes with less violence. This stress of depolitization of population is commonly called Inverted Totalitarism. Indeed, promotion of envy and suppression of any honest and candid debates about neoliberalism in the United States and elsewhere is one of its most striking features suggesting communality with medieval Catholicism. Neoliberalism's loudest message is that there is no alternative to the status quo, "there is no alternative".
David Harvey, the author of A Brief History of Neoliberalism, defines neoliberalism as attempt to undermine power and sovereignty of governments by transnational corporations and establish the regime in which the power of financial oligarchy (aka power of "free market") is dominant in the society using the concept of freedom as a smokescreen. For this purpose, neoliberal propaganda perverts the definition of 'freedom' in such a way, that it conceals redistribution of wealth up. Unlimited, unrestricted accumulation of money (aka greed") now is equated with human freedom.
Neoliberal state protects capital and at the same time tries to sheds as much social responsibility for the wellbeing of citizenry as possible. That's why neoliberal stat in 2008 bailed out corporate interests from bad decision making them whole, while destroying the safety net for "subprime" homeowners and lower part of the population. That's why neoliberal policies always result in rising inequality, slower economic growth, and drastic redistribution of income toward the upper class.
Neoliberalism has distinct tendency to convert state in national security states, in which as we noted before two distinct modes co-exists: permissive for capital and repressive for labor and social programs. Here is one Amazon review of the book:
Malvin on September 28, 2006
Deconstructing neoliberalism's peculiar definition of 'freedom'"A Brief History of Neoliberalism" by David Harvey is a concise and razor-sharp deconstruction of the neoliberal movement. Mr. Harvey convincingly demonstrates that neoliberalism is an ideology that has been wielded to enshrine elite privilege at the expense of people and the environment. Assiduously researched and cogently argued, Mr. Harvey offers a jargon-free and readable text that helps readers gain a greater understanding about the political economy of our neoliberal world and what this might hold for us in the future.
Mr. Harvey explains that neoliberal propaganda has succeeded in fixating the public on a peculiar definition of 'freedom' that has served to conceal a project of upper class wealth accumulation. In practice, the neoliberal state assumes a protective role for capital while it sheds as much responsibility for the citizenry as possible. Mr. Harvey details how neoliberal theory is ignored whenever it comes time to bail out corporate interests from bad decision making while the safety net for the working class has been gradually eviscerated. The author effectively intersperses the text with graphs to illustrate how thirty years of neoliberalist policies has resulted in rising inequality, slower economic growth, higher incomes among the upper class, and other measures that serve to convincingly support and prove his thesis.
Mr. Harvey's history of how neoliberalism has gained ascendancy mostly treads through familiar ground but also highlights some key events that are sometimes overlooked by others. For example, Mr. Harvey relates the well-known stories of how the Chilean coup in 1973 opened the door for Augusto Pinochet to implement the first national experiment in neoliberalism, followed by Margaret Thatcher in Great Britain in 1979 and Ronald Reagan in the U.S. in 1980. However, we also gain greater appreciation about the importance of the New York City bankruptcy in the 1970s. We learn how the city's financial crisis allowed for the imposition of neoliberal reforms in a manner that would prove to be a familiar template around the world: the rollback of labor rights, the privatization of public assets, cuts in public services, and increased policing, surveillance and political repression of a markedly polarized population.
Mr. Harvey surveys neoliberalism around the world to discover connections and to analyze its effects. He finds that the U.S. economy has benefited immensely from its ability to extract tribute from other nations, including the U.S. financial community's probable engineering of crises in developing nations in order to scoop up devalued assets on the cheap. The author discusses how economic restructuring programs imposed on poor countries has benefited U.S. and other foreign investors while it has bolstered or created a small but powerful class of wealthy individuals in Mexico, South Korea, Sweden and elsewhere. In China, Mr. Harvey remarks about the ease with which neoliberalism has found a home in an authoritarian state where the political elite have amassed their fortunes by exploiting a defenseless working class. The author is particularly concerned about the symbiotic relationship that has developed between the U.S. and China and muses about the potentially catastrophic financial situation that the two countries' mounting debts might pose for each other and the world economy.
There are also other definitions. But all-in-all any viable definition need to underline the fact that neoliberalism is about the transnational economic elite taking larger share of resources, income and political power in the society away from middle class. So it always means "class war", as well as blatant enrichment of top 1% at the expense of other 99%.
Those new masters of the universe in expensive suits managed to plunder almost the same number of countries on the globe under the smokescreen of protection of human rights, as Western powers during acquisition of colonies in XIX century. Any even after creating the most acute economic crisis in 2008 in the USA they still managed to privatize public assets and socialize all the losses. BTW the defense of human right never preclude the alliance with the most odious political regimes on the planet if such an alliance is about cheap hydrocarbons. Recently under the slogan "let us not allow bastards Russian dominate in our beloved Europe, they managed royally "f*ck EU, by cutting it from Russian hydrocarbons, as Victoria Nuland deftly admitted in her famous remark". After that the U.S. financial oligarchs deftly dropped the Euro to the floor and knocked any attempts of economic integration of EU with Russia.
In this "enrichment of top 1%" (which means first and foremost the US oligarchs and their British counterparts) aspect neoliberalism is based on a strategies of capital accumulation based on the plunder of weaker countries by transnational capital. The integration (or re-integration as is case with the USSR) of most countries in global production and financial system was based of forming a narrow strata of comprador elite (aka fifth column). Transnational fraction of local elites in competition with nationally-oriented fractions won the state power (that's what color revolutions were about). They utilized this acquired power to restructure national economy in the interest of transnational corporation, sell assets to transnationals for pennies on a dollar, put the countries into huge debt (see Ukraine, Greece, almost all Southern Europe) and merge them into the new global manufacturing and finance system with the center at the USA in the role of powerless vassals.
This a new global, transnational corporations based social system emerged by breakdown of First World Keynesian capitalism (welfare states) and Third World "developmentalist" capitalism by abolishing two key features:
Globalization became a new efficient strategy of capital accumulation as it allowed to shake off compromises and concessions that has been imposed by middle class with upper strata or industrial workers on national governments of G7 countries in the preceding epoch, when the USSR exists as a countervailing force and by the mere fact of its existence suppresses appetite of internal financial oligarchy. With the demolishing of gold standard in 1973 financial capital acquired unprecedented mobility and became able to operate across the borders in a new ways, which allows to eliminate the power of trade unions and state intervention, altering the balance of power in favor of international corporations. Emerging transnational elites instituted polices of deregulation, "supply-side" economics and regressive taxation creating new incentives for capital. Labor force was de-unionized and pushed into deregulated conditions with elimination of full time positions and adoption of "flexible labor" schemes. Via neoliberalism the world has became just a unified playing table for global corporations and states that support them. Material and political obstacles were removed as all states which undergone neoliberal revolutions shifted from post-WWII Keynesian social contract to serving transnational capital and transnational elites.
Neoliberalism also signifies a new historical period in the development of capitalism, the period of dominance of "monopoly-finance capital," and associated "Stagnation-Financialization trap" (SF trap) that drives processes of financial expansion in the economy from one bubble to another due to desperate attempts to stave off the tendency for stagnation of the "real economy" under the neoliberal regime.
While ideological postulates behind neoliberalism (Washington consensus) were discredited after financial crisis of 2008, it now persists in "zombie stage" as there is no viable alternatives and because the ability of transnational elite to find and fund a sufficient part of national elite (compradors) proved to be overwhelming for most states. And it is a quite powerful zombie which still is able to attack and suck blood from other countries which was recently demonstrated in Libya and Ukraine (Maidan).
Since 2007 some Latin American countries got governments that openly oppose neoliberalism. Direct military invasion against them is now more difficult as the threat of communism (which justified such invasions in the past) is off the map. But we can expect attempts to stage color revolutions or classic Coup d'état to reverse those events. One such color revolution (White revolution in Russia in 2011-2012) recently failed. Another (Maidan in Ukraine) is ongoing.
For G7 nations the neoliberalism in zombie stage might have staying power to survive until the end of the period of "abundant hydrocarbons" whether it means the next twenty or the next two hundred years. In any case they, and first of all the USA and GB, bet their prosperity on the viability of neoliberal regime and they now can't abandon it without significant losses.
Still ideological crash of neoliberalism in 2008 has its effects and the rest of the world gradually becoming less and less enthusiastic about neoliberalism, although few dare to openly argue with the USA policies. And for now the USA remains the sole superpower (new Roman Empire) and can economically squeeze or destroy dissident as we are now observing with Russia.
But it is intellectually bankrupt doctrine, no question about it. Not long ago, the cold war ended with the restoration and triumph of capitalism in the form of neoliberalism on a global scale, and then, less than three decades later, neoliberal form of capitalism is, in turn, became as intellectually bankrupt as communism was in 1990th. By all accounts, the financial catastrophe of 2008 was not only the worst since the Great Depression economic crisis, but a political crisis that somewhat reminds the crisis of Marxist ideology in the USSR in 1960th and 1970th.
As neoliberalism no longer can be sold as the only viable ideological model for other countries, it is now force fed using the strength of American economics and American and NATO bayonets. As well as the strength of transnational elite interested in maintaining status quo (Soros, Rockefellers, Rothschilds, etc)
The vast technological and cultural superiority of the West also matters, although to a lesser extent, as China now became the key factory for the world and as such possesses most of the modern technologies on its factories (which belong to foreign corporation, but still are on China territory).
Another factor that prolongs the life of neoliberalism is that no viable alternative exists, although attempts of partial restoration of the power of national states in a form of state capitalism (Russia, China, USA) and more balanced approach between interests of national population and international corporations are attempted in various forms in various countries (Hungary, many Latin American countries).
We can view neoliberalism as Trotskyism for the rich. See Neoliberalism as Trotskyism for the rich
From political point of view neoliberalism vision is somewhat close to Communists vision. It also relies on state repression (despite demagogy of Washington consensus about "free markets") and generally can't exist without police state (or National Security State as we now call it; Total surveillance is just icing on the cake). Under neoliberalism the state become more repressive toward lower 80% of population and, especially, labor, but much less repressive toward various forms of capital and, especially, large capital.
In this sense the only difference is the location of the capital: while the USSR was the holy land of communist world and Moscow its global capital, now the holy land of neoliberalism is the USA and the capital is Washington. With the USA government and Washington headquarters of IMF and World Bank making close analogy to Politburo of CPSU. Due to their strong tendency for political dictate US embassies in Eastern Europe and xUSSR space are sometimes called "Washington Obcoms". As in following post in freerepublic.com
kronos77
Funny how clueless are foreigners about Russian commies. Putin plays tough man for better bargain positions while actually he accepts orders from Washington obcom (regional committee of CPSU). Putin serves to interests of oligarchs and conducts actually liberal anti-Russian policy. He like helps oligarchic vampires to suck out money from Russian economy and invest them in US economy and Western banks what is absolutely unacceptable for Russian commies.
Like with Comminist International, other states are just vassals who implement directions from benevolent "Washington Obcom" and install the leaders recommended by it, or face ostracism (YouTube) or, worse, direct military invasion... Funny, but it was the corrupt communist elite which put the major effort in helping to implement this vision via the dissolution of the USSR.
As Pope Francis noted that like Marxism in the past neoliberalism represents a new philosophy, new kid on the block. He see principal feature of this new philosophy in what he called the "idolatry of money" and turning inequality into moral imperative (Evangelii Gaudium, Apostolic Exhortation of Pope Francis, 2013):
No to the new idolatry of money
55. One cause of this situation is found in our relationship with money, since we calmly accept its dominion over ourselves and our societies. The current financial crisis can make us overlook the fact that it originated in a profound human crisis: the denial of the primacy of the human person! We have created new idols. The worship of the ancient golden calf (cf. Ex 32:1-35) has returned in a new and ruthless guise in the idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose. The worldwide crisis affecting finance and the economy lays bare their imbalances and, above all, their lack of real concern for human beings; man is reduced to one of his needs alone: consumption.
56. While the earnings of a minority are growing exponentially, so too is the gap separating the majority from the prosperity enjoyed by those happy few. This imbalance is the result of ideologies which defend the absolute autonomy of the marketplace and financial speculation. Consequently, they reject the right of states, charged with vigilance for the common good, to exercise any form of control. A new tyranny is thus born, invisible and often virtual, which unilaterally and relentlessly imposes its own laws and rules. Debt and the accumulation of interest also make it difficult for countries to realize the potential of their own economies and keep citizens from enjoying their real purchasing power. To all this we can add widespread corruption and self-serving tax evasion, which have taken on worldwide dimensions. The thirst for power and possessions knows no limits. In this system, which tends to devour everything which stands in the way of increased profits, whatever is fragile, like the environment, is defenseless before the interests of a deified market, which become the only rule.
Simultaneously neoliberalism proved to be the most capable ideology to fight and displace Marxism. It actually inherited quite a bit from Trotskyism (see below), so in a way it was "evil twin" of Marxism. And it was relevant and effective not because it was a "better ideology", but because Marxism as ideology self-destructed due to several major problems caused by actual experience with state socialism as implemented in USSR and other countries of Warsaw block:
Economic efficiency of such regime proved to be low and in no way it represented a new level of productivity of labor as Marxism assumed. Standard of living in the USSR was non comparable with the standard of living achieved in Western Europe and the USA in many (although not all) metrics. Also the dominance of military industrial complex became even more pronounced in the USSR then in the USA.
In this sense Gorbachov's perestroika" was a forced. desperate measure dictated by the need to switch to a new, more “viable” model of state socialism by incorporating ( in a controlled fashion) such capitalism features as markets, competition, and private incentives similar to Lenin's NEP policies. This process went out of control because Soviet nomenklatura decided to privatize the country instead, rationally expecting that it will prosper more under the new neoliberal regime then under state socialism. So this was a counterrevolution from the top (a typical neoliberal revolt of the elite), led by members of Politburo and KGB with the explicit Western support and huge (and mostly covert) financial flows to sustain "protesters".
Deng Xiaoping was more
successful in China then Gorbachov (who proved to a very weak, almost amateur politician), despite
the fact that he also adopted NEP-style model with the neoliberal core as the basis of "market part"
of "socialism with
Chinese characteristics". But he more wisely started with allowing Western firms to produce goods
in China using cheap China labor in selected economic zones, while preserving the political control
of the Communist Party. Also Chinese Communist party was much younger then the CPSU, so the process
of degeneration of leadership did not went as far. But in general, the possibility of neoliberal
"revolt of the elite" in China still remains, as China Communist Party now is gradually becoming
as corrupt as CPSU in the USSR.
And another blow came from the evolution of trade unions in major western countries into hierarchical, subservient to management organizations with its own static and partially parasitic elite. Development of nomenklatura as a ruling class in the USSR was just the last nail in the coffin of the idea of "dictatorship of the proletariat".
Gorbachov was actually the source of embarrassment among Russian people in the same way as George W Bush was in the USA for American people. Both never managed to learn their native languages and used to speak using mangled words and phrases (Gobachvisms vs. Bushisms). Which might be also a sign of some brain condition, that inhibits speech center. Here is one post from The Kremlin Stooge:
kievite says:April 12, 2011 at 3:33 amI think Gorbachev was not fooled; he was just very weak, deeply provincial politician, who failed to see any way to reform the USSR without Western help, not understanding that the first thing West plans to do is to organize, finance and support nationalists in a hope they will blow the USSR up. It was pretty funny that Gorbachev, like Bush, never mastered his own language. “Gorbachevisms”, like “Bushisms” were constant fodder for humorists.
Yeltsin, in my book, was impulsive, clueless, power hungry alcoholic who raised to power only on the wave of general distrust and hate of Communist Party. He has no clue what to do.. In way he like Gorbachev was a symbol of degradation of Politburo.
Yeltsin was a binge drunkard who possessed only one important for a politician trait -- tremendous lust for power. He happily adopted neoliberalism sold by the USA as a way to get and preserve his political power, so Russia first suffered from its adoption of Bolshevism in 1917 and then Neoliberalism in 1991. I think two such adoptions are equal to nuclear attack on the country. Now I understand why Bismarck used to say to parliamentarians who tried to persuade him to adopts socialist principles:
OK let's do it, but first let's chose the country we don't care about. And his saying is as true for neoliberalism as it was for socialism.
| Bushonomics is the continuous consolidation of money and power into higher, tighter
and righter hands George Bush Sr, November 1992 |
Neoliberalism is not a collection of theories meant to improve the economy. Instead, it should be understood as a strategy of "class struggle" (in Marxist terms) designed to redistribute wealth upward toward an increasingly narrow fraction of population (top 1%). The essence of neoliberalism is well reflected in the listed above George Bush Sr. quote "...the continuous consolidation of money and power into higher, tighter and righter hands". Kind of revolt of the elite against common people, instead of revolt of proletarians against capitalists. The attempt to redistribute the wealth of nations in favor of the top 1% and especially top 0.01%.
From the very beginning neoliberalism was a project to restore of class power of US corporations owners and first of all financial oligarchy ("financial revanchism" was the major driver of neoliberalism), which was undermined by New Deal.
So it is not surprising the during neoliberal revolution (or more correctly counter-revolution) in the USA all redistributive postwar state capitalism policies that hurt financial elite came under attack. With the demise of the USSR, the necessity of such policies to ensure social peace disappeared and the elite (and first of all financial elite) got a carte blanch for decimating middle class, and redistributing the wealth up. Golden days of the US middle class not ended not exactly with the election of Reagan (remember his decimation of air traffic controller union) but with the election of Mr. Gorbachov. And they became a distant past under Clinton who sold Democratic Party to financial oligarchy and only become worse and worse under Bush II and Obama (who, social policy-wise, is just well-tanned Bush III). And on international arena brutal enforcement of Washington consensus became a norm. So Ukraine got under the same neoliberal steamroller.
Neoliberalism promises of "better future" for population outside top 1% were by and large political scam. In best case no more then top 20% of population can benefit from neoliberal policies. And that's in best case, which is applicable probably only to G7 countries. And the other bottom 80% experience a sharp decline of their standard of living. For "peripheral countries like Ukraine, Iraq, Chili, etc) instead of 80:20 the proportion in probably 90:10.
All-in-all neoliberalism as a social system always lower the average standard of life of people in countries which adopted it, never rise it. That happened even in countries which historically has very low standard of living of middle class such as former USSR republics and Eastern Europe. At the same time it tremendously improved standard of living of upper 10% (20% in case of G7 countries) of population, and, especially, the top 1% - the new aristocracy. And that top 10% has enough political power to keep and consolidate neoliberal counter-revolution and with help of G7 countries to spread it around the globe.
Transnational elite "International" proved be both more viable and durable then "proletarian International" envisioned by Marx and his followers. That does not mean that elites from other countries are treated as equal partners. No they are treated as "villagers that came to the city" but still they are given a chance to "merge" with local "aristocracy of wealth".
The USA is the center on neoliberal order, its capital. Neoliberalism is supported by projection of the USA military power and the use of US capital. It forces global economic integration on US terms at whatever costs to others. But with those reservations it is as close to "oligarchy of all countries unite" as one can get.
In a way Marx probably is turning in his grave, as his ideas were hijacked and implemented by the part of population he considered to be doomed. In other words Marxist idea of "class struggle" was turned to its head and converted into pervert "revolt of the elite" (and first of all financial oligarchy), unsatisfied with the piece of the pie it is getting from the society and stimulated by technological revolution (emergence of Internet and cheap mass produced computers). Neoliberal philosophy can be distilled into a single phrase: "Humanity begins at the rank of CEO" or as George Bush Sr, aptly said November 1992 it is "...the continuous consolidation of money and power into higher, tighter and righter hands."
Some authors like Colin Cronch in The Strange Non-death of neoliberalism consider it to be a new ruling class alliance. His basic idea is that at least in USA neoliberalism represents the shift of loyalty of the upper management class: following the Great Depression of 1930 a political alliance emerged between the upper management class and "salaried middle class" (which includes the top layer of blue and white collar workers, including quasi-management, clerical workers, and professionals, and which cannot be reduced to the traditional "working-class"). A severe profitability crisis of the 1970s with its inflationary excesses caused a fracture between upper management and "salaried middle class". From that point upper management allied with owners and financial oligarchy forming a new ruling class.
This neoliberal transformation of the society with the redistribution of wealth to the top 1% (or, more correctly, the top 0.01%) "have and have more" (as unforgettable G.W.Bush quipped) was completed in the USA in late 90th. The rest of population (aka moochers) and organization such as trade unions were undermined and decimated by financial oligarchy with near complete indifference to what happens with the most unprotected lower quintile of the population.
Like Russia in the past under Bolsheviks the USA became occupied country. And much like Bolsheviks in the past, the neoliberal reformers don't care about failures and contradictions of the economic system which drive the majority of country population into abject poverty. No they care about that their action such a blowing out financial bubble like in the USA in 2008 which definitely could move national economics toward the disaster ("off the cliff"). They have somewhat childish, simplistic "greed is good" mentality: they just want to have their (as large as possible) piece of economic pie fast and everything else be damned.
To that extent they have mentality of criminals and neoliberalism is a highly criminogenic creed, but it tried to conceal the racket and plunder it inflicts of the societies under dense smoke screen of "free market" Newspeak. That means that outside the USA and G7 countries which are the major beneficiaries of this "hyper globalization of élites" neoliberalism is an unstable social order, as plunder can't continue indefinitely. and as natural resources become more scarce, the fight for them might give advantages to "Asian" autocratic flavor of state capitalism.
Problems inherent in neoliberal model were also by-and-large masked for two decades by a huge shot in arms Neoliberalism got with the dissolution of the USSR. This particular event (which was just a decision of part on nomenklatura including KGB to join neoliberal counter-revolution) put on the dinner table of neoliberal elites half a billion people and quite a bit of resources to plunder. This gift of a century from Bolsheviks slowed down the process of plunder of G7 own population, especially in the USA. It is interesting to note that, like Bolsheviks in the past, neoliberal elite behaves more like occupiers of the country, then as a traditional, "native" aristocracy; this phenomenon was especially pronounced in Russia (privatization under Yeltsin regime) and other xUSSR countries. And in xUUSR space new neoliberal lords were almost as brutal as German occupiers during WWII.
So later neoliberalism in came under pressure even in G7 countries, including the USA, as slogan on a corner Wall Street cafe "Jump Suckers !" demonstrated so aptly in 2008 and later in Occupy Wall Street Movement (which probably should be named "get rid of Wall Street occupation of the country"). The latter was quickly undermined, dissipated by the emerging National Security State. Total surveillance makes opposition movements practically impossible.
Neoliberalism was also partially reversed in Chile (the first country on which neoliberal counter-revolution was launched), Russia, and several other countries. It was never fully adopted in northern Europe or Asian countries. The model of autocratic state capitalism used in Asian countries actually serves as the only viable and competing with the neoliberalism modern social organization. Move of manufacturing centers to China and other East Asian countries also moves political influence toward this region, away from the USA and G7. Recently China managed slightly push back western global brands in electronics (especially in Eastern European markets), producing competitive smartphones (Huawey, Fly, Lenovo), tablets (Lenovo), PCs and networking equipment such as routers and switches under this own brand names.
Neoliberalism was enforced under dense smoke screen of propaganda. One can see an example of this smoke screen in Thatcher's dictum of neoliberalism: "There is no such thing as society. There are only individuals and families." In foreign policy neoliberalism behaves like brutal imperialism (aka neocolonialism) which subdue countries instead of brute force either by debt slavery or combination of debt slavery with direct military intervention. In neoliberal view the world consist of four concentric cycles which in order of diminishing importance are
In other words, finance and transnational financial institutions are considered to be the most important institutions of the civilization, the institutions which should govern all other spheres of life. It is clear that such one-dimensional view is wrong, but neoliberals like communists before them have a keen sense of mission and after they managed to accomplish its "long march through the institutions" (during which they gradually hijacked them in what is called Quiet coup) they changed the way Americans think (Using the "Four M" strategy -- money, media, marketing, and management)
A well-oiled machine of foundations, lobbies, think-tanks, economic departments of major universities, publications, political cadres, lawyers and activist organizations slowly and strategically took over nation after nation. A broad alliance of neo-liberals, neo-conservatives and the far right (including neo-fascists and religious right) successfully manufactured a new common sense, assaulted Enlightenment values and formed a new elite, the top layer of society, where this "greed is good" culture is created and legitimized.
As Crouch says in his book The Strange Non-death of neoliberalism:
a polity in which economic resources were very unequally shared would be likely to be one in which political power was also concentrated, economic resources being so easily capable of conversion into political ones. (Page 125)
... ... ...
...the state, seen for so long by the left as the source of countervailing power against markets, is today likely to be the committed ally of giant corporations, whatever the ideological origins of the parties governing the state. (Page 145)
Its key ethical principle of neoliberalism (only for the elite, never for prols or middle class) is "Greed is good" (as Gordon Gekko the personage of Wall Street (1987 film) quipped in the film). This strata of people (which starts on the level of CEO of major corporation) who preach those principle is assumed to be Übermensch. People below are considered to be "under humans", or "inferior humans" (Untermenschen)
According to Wikipedia, the inspiration for the "Greed is good" speech seems to have come from two sources. The first part, where Gekko complains that the company's management owns less than three percent of its stock, and that it has too many vice presidents, is taken from similar speeches and comments made by Carl Icahn about companies he was trying to take over. The defense of greed is a paraphrase of the May 18, 1986, commencement address at the UC Berkeley's School of Business Administration, delivered by arbitrageur Ivan Boesky (who himself was later convicted of insider-trading charges), in which he said, "Greed is all right, by the way. I want you to know that. I think greed is healthy. You can be greedy and still feel good about yourself".
As Pope Francis notes glorification of greed is socially destructive. While in all previous "classic" religions (including such social religion as Marxism) excessive greed was morally condemned, neoliberalism employed a slick trick of adopting "reverse", Nietzschean Ubermench morality. Here is a relevant quote from his Evangelii Gaudium, Apostolic Exhortation of Pope Francis, 2013
One cause of this situation is found in our relationship with money, since we calmly accept its dominion over ourselves and our societies. The current financial crisis can make us overlook the fact that it originated in a profound human crisis: the denial of the primacy of the human person! We have created new idols. The worship of the ancient golden calf (cf. Ex 32:1-35) has returned in a new and ruthless guise in the idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose. The worldwide crisis affecting finance and the economy lays bare their imbalances and, above all, their lack of real concern for human beings; man is reduced to one of his needs alone: consumption.
56. While the earnings of a minority are growing exponentially, so too is the gap separating the majority from the prosperity enjoyed by those happy few. This imbalance is the result of ideologies which defend the absolute autonomy of the marketplace and financial speculation. Consequently, they reject the right of states, charged with vigilance for the common good, to exercise any form of control. A new tyranny is thus born, invisible and often virtual, which unilaterally and relentlessly imposes its own laws and rules. Debt and the accumulation of interest also make it difficult for countries to realize the potential of their own economies and keep citizens from enjoying their real purchasing power. To all this we can add widespread corruption and self-serving tax evasion, which have taken on worldwide dimensions. The thirst for power and possessions knows no limits. In this system, which tends to devour everything which stands in the way of increased profits, whatever is fragile, like the environment, is defenseless before the interests of a deified market, which become the only rule.
No to a financial system which rules rather than serves
57. Behind this attitude lurks a rejection of ethics and a rejection of God. Ethics has come to be viewed with a certain scornful derision. It is seen as counterproductive, too human, because it makes money and power relative. It is felt to be a threat, since it condemns the manipulation and debasement of the person. In effect, ethics leads to a God who calls for a committed response which is outside of the categories of the marketplace. When these latter are absolutized, God can only be seen as uncontrollable, unmanageable, even dangerous, since he calls human beings to their full realization and to freedom from all forms of enslavement. Ethics – a non-ideological ethics – would make it possible to bring about balance and a more humane social order. With this in mind, I encourage financial experts and political leaders to ponder the words of one of the sages of antiquity: “Not to share one’s wealth with the poor is to steal from them and to take away their livelihood. It is not our own goods which we hold, but theirs”.[55]
Like Bolshevism and National Socialism before neoliberalism needs a huge propaganda machine comparable with the propaganda machines of Bolsheviks and the Third Reich. Neoliberal ethics is pushed through the throat by hundreds of radio stations, cable TV channels (with Fox as the most prominent stooge of neoliberal propaganda), magazines and newspapers (Wall Street Journal, NYT, etc). This ethics is presented as a specific philosophy of Randism which is an ultimate expression of neoliberal ethics.
Here analogy with Bolshevism became even more stark. When you think about the current Republican Party, you can distinguish a small circle of ideologues consisting by-and-large of Ayn Rand followers. In a way it reminds the original Ann Rand circle called "collective", which like Bolshevik's core consisted of Jewish intellectuals, such as Greenspan. And that is not a positive characteristic. Murray Rothbard, a member of Rand's circle for several months in 1958, described the Randroids as “posturing, pretentious, humorless, robotic, nasty, simple-minded....dazzlingly ignorant people.” (Sex, Ayn Rand and the Republican Party)
Like in Marxism the view of other classes (in this case lower classes) by this new alliance is hostile. They are parasites, moochers, etc (exactly like capitalist class in Marxism), all feeding from the state, which in turn deprives "masters of the university" the spoils of their ingenious activity. Neoliberalism professes open and acute hostility to "lower classes", as if modeled on Bolsheviks hatred of "capitalists". This hate (like hate in general) paradoxically gives neoliberalism a driving force: as Irish novelist Elizabeth Bowen quipped: "Some people are molded by their admirations, others by their hostilities."
And this Ubermench feature of neoliberalism attracts young people in the same way they were attracted to national socialism with its hate of racially inferior nations. In a way neoliberalism converted the concept of "Arian race" into the concept of morally and intellectually superior transnational elite.
Historically connection of neoliberalism and neo-fascism is extremely strong: one of first experiments in introduction of neoliberal ideology (Pinochet putsch in Chile) has definite neo-fascist colors.
The worst violence occurred in the first three months of the coup's aftermath, with the number of suspected leftists killed or "disappeared" (desaparecidos) soon reaching into the thousand.[6] In the days immediately following the coup, the Assistant Secretary of State for Inter-American Affairs informed Henry Kissinger, that the National Stadium was being used to hold 5,000 prisoners, and as late as 1975, the CIA was still reporting that up to 3,811 prisoners were still being held in the Stadium.[7] Amnesty International, reported that as many as 7,000 political prisoners in the National Stadium had been counted on 22 September 1973.[8] Nevertheless, it is often quoted in the press, that some 40,000 prisoners were detained in the Stadium.[9] Some of the most famous cases of "desaparecidos" are Charles Horman, a U.S. citizen who was killed during the coup itself,[10] Chilean songwriter Víctor Jara, and the October 1973 Caravan of Death (Caravana de la Muerte) where at least 70 persons were killed.[11] Other operations include Operation Colombo during which hundreds of left-wing activists were murdered and Operation Condor, carried out with the security services of other Latin American dictatorships.Following Pinochet's defeat in the 1988 plebiscite, the 1991 Rettig Commission, a multipartisan effort from the Aylwin administration to discover the truth about the human-rights violations, listed a number of torture and detention centers (such as Colonia Dignidad, the ship Esmeralda or Víctor Jara Stadium), and found that at least 3,200 people were killed or "disappeared" by the regime.
A later report, the Valech Report (published in November 2004), confirmed the figure of 3,200 deaths but dramatically reduced the alleged cases of disappearances. It tells of some 28,000 arrests in which the majority of those detained were incarcerated and in a great many cases tortured.[12] Some 30,000 Chileans were exiled and received abroad,[13][14][15] in particular in Argentina, as political refugees; however, they were followed in their exile by the DINA secret police, in the frame of Operation Condor which linked South-American dictatorships together against political opponents.[16] Some 20,000-40,000 Chilean exiles were holders of passports stamped with the letter "L" (which stood for lista nacional), identifying them as persona non grata and had to seek permission before entering the country.[17] Nevertheless, Chilean Human Rights groups maintain several hundred thousand were forced into exile.[14]
According to the Latin American Institute on Mental Health and Human Rights (ILAS), "situations of extreme trauma" affected about 200,000 persons; this figure includes individuals killed, tortured (following the UN definition of torture), or exiled and their immediate relatives.[citation needed] While more radical groups such as the Movement of the Revolutionary Left (MIR) were staunch advocates of a Marxist revolution, it is currently accepted that the junta deliberately targeted nonviolent political opponents as well
A court in Chile sentenced, on March 19, 2008, 24 former police officers in cases of kidnapping, torture and murder that happened just after a U.S.-backed coup overthrew President Salvador Allende, a Socialist, on September 11, 1973.[18]
Neo-fascist putsch in Chile got stamp of approval personally from Milton Friedman, who actually was instrumental in moving Chile into neoliberal orbit (Neoliberalism - Wikipedia, the free encyclopedia):
In 1955, a select group of Chilean students (later known as the Chicago Boys) were invited to the University of Chicago to pursue postgraduate studies in economics. They worked directly under Friedman and his disciple Arnold Harberger, while also being exposed to Hayek.
When they returned to Chile in the 1960s, the Chicago Boys began a concerted effort to spread the philosophy and policy recommendations of the Chicago and Austrian schools, setting up think tanks and publishing in ideologically sympathetic media. Under the military dictatorship headed by Pinochet and severe social repression, the Chicago boys implemented radical economic reform. The latter half of the 1970s witnessed rapid and extensive privatization, deregulation, and reductions in trade barriers.
In 1978 policies that would reduce the role of the state and infuse competition and individualism into areas such as labor relations, pensions, health, and education were introduced.[2] These policies resulted in widening inequality as they negatively impacted the wages, benefits and working conditions of Chile's working class.[49][50] According to Chilean economist Alejandro Foxley, by the end of Pinochet's reign around 44% of Chilean families were living below the poverty line.[51] In The Shock Doctrine, Naomi Klein argues that by the late 1980s the economy had stabilized and was growing, but around 45% of the population had fallen into poverty while the wealthiest 10% saw their incomes rise by 83%.[52]
Two decades after it was first used by pro-market intellectuals in the 1960s, the meaning of neoliberalism changed. Those who regularly used the term neoliberalism in the 1980s typically applied it in its present-day, radical sense, denoting market fundamentalism.
In 1990 the military dictatorship ended. Hayek argued that increased economic freedom had put pressure on the dictatorship over time and increased political freedom. Many years earlier, in The Road to Serfdom (1944), Hayek had argued that "economic control is not merely control of a sector of human life which can be separated from the rest; it is the control of the means for all our ends."[53] The Chilean scholars Javier Martínez and Alvaro Díaz reject that argument pointing to the long tradition of democracy in Chile. The return of democracy had required the defeat of the Pinochet regime though it had been fundamental in saving capitalism. The essential contribution came from profound mass rebellions and finally old party elites using old institutional mechanisms to bring back democracy.[54]
The essence of neoliberalism is globalization of corporatism, which previously have distinct national boundaries and some forms of which were rabidly nationalistic (for example German national socialism). Just imagine a single global state with the capital in Washington with the typical for such a superstate flow of people to capital and you essentially catch the essence of the USA elite neoliberal dream -- Pax Americana. There are also second class cities such as London, Berlin, Tokyo, etc which while not as attractive are much better then the "deep province", such as Prague, Warsaw or Sanct-Petersburg. to say nothing about impoverished "countryside" such as Kiev, Tallin, Riga, Vilnus, etc.
So the flow of people and commodities (and first of all oil) has distinct direction from the periphery to the center. To keep each country in the line and this flow of commodities uninterrupted, this "Capitalist International" relies on the part of national capitalist class and elite which is connected to international corporations serving the same role as Communist Parties or Communist International. Such as part is often called Compradors or Fifth Column of Globalization
And this "international elite" is even more responsive to pressure from Washington, as its fortunes and often families reside if "first class cities" of G7. This way neoliberalism is able to suppress the other part of the elite of particular country which favors "national" development and typically resides inside the country. As a PR smokescreen neoliberalism pay lip service to national development, but in essence it is hostile to it and favor "underdevelopment" of nations outside G7. It's anti-social and has distinct schadenfreude attitude to weak nations: it derives pleasure from seeing the misfortunes of other nations and it try to exploit such moments ("disaster capitalism"). Vae victis as Romans used to say (Victor's justice).
And the winner in neoliberal revolutions is not the middle class and lower strata of population (although they might be sold on it and fight for it, being deceived by propaganda as is the case with the current generation of Americans), but international and local oligarchy represented via international corporations and banks. For bottom 90% population the hangover after the neoliberal revolution comes really quick. This affect was clearly visible after successful color revolution in Serbia, Georgia and Ukraine.
In cases of Georgia and Ukraine the neoliberal leaders lost power after their term and there were efforts to put them in jail for abuse of power and corruption, which were not successful only due to USA pressure (only former Ukrainian Prime Minister Julia Timoshenko, the Joan of Arc of Orange revolution was jailed). In any case popularity of leaders of neoliberal revolutions drops to almost unheard levels with Victor Yushchenko commanding 2% approval rating in Ukraine before the end of his term.
Neoliberalism also has common with fascism "white man burden" syndrome (I cite Neoliberalism is fascism):
One last prefatory remark: I think it is important to recognize that fascism (forms of contemporary conservatism) is a result of neoliberal thought. It is not simply a supplement that aims to save neoliberalism from itself. So, even as forms of religious fundamentalism provide supplements to the extremes of neoliberalism, neoliberalism on its own has horribly conservative effects. The passage below comes from:
TCS Daily - House of Pain: Why Failure Is Important.
Every successful society has devised ways of separating incompetent or systematically unlucky people from the control of valuable resources. (That's why civilized nations provide children and legally incompetent individuals with guardians and trustees.) This is an essential process for all but the most wealthy of nations, e.g., those cursed by great oil wealth. (This windfall wealth situation is the national analogue of individuals winning the lottery; a harbinger of bad things that follow the lack of a need to husband resources.)
A society's economic success is increased if it has sure and quick ways to accomplish this separation, however painful to those who suffer losses. While there will be political pressures to buffer folks from the consequences of economic folly or bad luck, it is socially dangerous to do so. Reality checks should have force, so that those who fail to prudently manage resources will not keep control over them.
Let's identify the problems with the passage. First, failure is a matter of incompetence or bad luck. Although bad luck is qualified with the term 'systemic,' the writer's flip attitude overlooks systemic forms of exclusion like race, sex, or citizenship. It occludes as well the impact of inherited wealth (a form of the systemic protection of the incompetent) and generational poverty. Second, incompetence and bad luck are equated with being civilized. To be unlucky, then, is to be childlike, immature, incompetence, and barbaric (attributes long associated with justifications for colonialism). I'm going to skip the section on oil wealth, although I would think that people with more knowledge of the Middle East and the ways that the Mid East figures in neoliberal rhetoric would have interesting things to add here.
In 2014 a lot of people here condemned excesses of Ukraine nationalism, especially the part of Galician
nationalism the has clear neo-fascist flavor and that now attempts to colonize South and Eastern Ukraine
in a kind of replay of Drang nach Osten.
But rise of nationalism is a pan-European phenomenon now. And it is observable in almost any county,
including but not limited to France, Germany, Poland, Hungary, Greece, and even UK.
Is not this is a (somewhat pervert) reaction to excesses of neoliberalism and neoliberal globalization?
In other words is not the key side effects of neoliberal globalization is the rise of ultra nationalist
and neo-fascist movements all over the world? Many researchers think that yes (Globalization,
ethnic conflict and nationalism Daniele Conversi - Academia.edu):
The force of nationalism has spread well over the nineteenth century into the age of globalization. There are thus parallels between modernization and globalization as sti-mulating factors for nationalism and ethnic conflict. Although the reach of globalizationis historically unprecedented, some of its features accompanied the rise of modernity andthe advent of the modern nation state. In particular, both resulted in the demise of older boundaries and the construction of new ones. Whereas industrialization destroyed localand regional boundaries by superimposing national boundaries on them, globalizationdestroyed national boundaries by superimposing a plethora of supra-national and corpo-rate networks on them, including mafias, organized crime, and multi-national corpora-tions (MNCs), none of which are as easily identifiable on a political map as sovereign, countries still are. The adoption of planetary rules to comply with the standards set by the International Monetary Fund (IMF) and the World Bank has unsurprisingly resulted in global disempowerment, at least according to the perception of influential NGOs activists (Korten 2001).
Has all this also led to a decline in national identities? Not at all. Partly because nationalcultures have been seriously damaged or reshaped by globalization, we have seen a global intensification of ethnic belligerence. Moreover, the formation of new elites and the spread of capitalist wealth have led to nationalist self-assertion, while cultural impoverishment spurred a generalized need for compensatory ethnic assertiveness.
... ... ...
If nationalism cannot be explained independently from the onset of modernity andmodern state-making, both are enmeshed in the expansion of warfare. Nationalism manifested itself in an era of inter-state competition, the collapse of boundaries, economic expansion, mass migration, general insecurity, political centralization, obsessivelaw-making, societal policing, and drastic militarization, finally leading to war. In them eanwhile, the Pax Britannica ensuing Waterloo provided the impetus for colonialexpansion while fomenting inter-imperial rivalries and competition (Conversi 2007).Thus, just as Europe was accumulating wealth, power, and armaments in anticipation of the unprecedented conflagration, its global economic reach affected broader and broader areas of the world. Economic competition and destructive warfare were just beingexported beyond European borders. Linda Colley notes:
the profit and the price of this hundred-year partial European peace was unprecedented Western, and especially British, freedom to concentrate on global empire. In 1800, the European powers, together with Russia and the United States, laid claim to some 35 percent of the globe’s total land area. By 1914 [their] proportion of the globe … had risen to 84 percent (Colley 2002:311).
By 1914, the West had also accumulated enough economic wealth and weapons of mass destruction to unleash the greatest manslaughter in human history. The totalitarian era following the First World War has been described as the culmination of a pattern of mass dislocation founded on modernity (Arendt 1958; Bauman 1989). As we shall see later, the emergence of totalitarianism in Europe coincided with the first wave of deep Americanization, including the triumph of Hollywood, cigarette consumption, the car culture, and other US products meant for mass distribution.
... ... ...
The expansion of nationalism throughout the globe is hence the spreading out of aWestern idea. In other words, nationalism is an essential component of Westernization.As I have argued, nationalism cannot be understood outside the devastating impact of modernity, particularly industrialization, with its demise of traditional lifestyles, skills,cultures, and communities (Gellner 2006). Such a devastation was suciently all-pervasiveto argue that the victory of nationalism represented the victory of a surrogate sense of community, which for some was a colossal
‘ fraud’ (Gellner 2006) or an invented tradition (Hobsbawm 1983). Thus, for Gellner the nationalists spoke in defence of a hypo-thetical Gemeinschaft, but actually practiced the construction of a novel Gesellschaft, the two being largely incompatible. For both Gellner and Hobsbawm nationalism was not much less than a form of cultural
brainwashing. For others, the whole process was not only counterfeit, it was based on the conspiracy of emerging rapacious economic and political elites, which used selected elements of popular tradition while invoking nationhood, just as populists often invoke the defence of the people. For instance, the role of secret societies like the Italian carbonari is a widely known and omni-present feature of nineteenth-century century mobilization. Secret paramilitary groups of patriots played a pivotal role in the spread of most nationalist movements. Karl Marx’s characterization of nationalism as a form of false consciousness manipulated by the bourgeoisie is a well-known example of this conspiracy approach. Traditionalist, anarchical, conservative, and even liberal approaches often share similar views of nationalism as a strategy of elites. The broader trend is often known as instrumentalism(Smith 1998),because it emphasizes the mere instrumentality of nationhood. Nations do no exist assuch; they are simply cultural tools in the hands of elites or proto-elites who seek to mobilize the masses on the basis of an emotional appeal to a common but fictitious nationality.As we shall see, in its current shape cultural globalization is often understood as a one-way importation of standardized cultural items and icons from a single country, the United States of America, to the rest of the world regardless of the fact that most of theitems are actually made in China. For many, globalization is synonymous with Westernization (la Branche 2003, 2005, Latouche 1996) or, more accurately, Americanization.The international consequence of Americanization is a widespread sense of cultural insecurity vis-à-vis an unfathomable force that nobody seems capable of containing(Amin 2004). Because this perception has been so far unable to produce organized, rational and universal responses, it tends to express itself through visceral, rudimentary,and unpredictable forms of anti-Americanism (Barber 1995).
Former Secretary of State Madeleine Albright showed insights about the US full-spectrum dominance cultural policy when she said that Cultural factors play a pivotalrole in many of the international challenges we face
our cultural programs are central -- and I underline that — central to the success of American foreign policy
(Albright2000). Once out of office, she adopted a more cautious position, considering the risks and damages infl
icted by extreme forms of Americanization. For Bacevich (2002), the economic openness implicit in neoliberalism produces a form of globalization that is inevitably synonymous with Americanization, since it is predicated on a national security approach founded on global dominance.
Neoliberalism is not merely a new pseudo-religious, cult-like version of globalized corporatism. Like national socialism before it is also simultaneously a powerful ideological export product. It is the core of Pax Americana, which the USA tries to impose of the rest of world. As Samuel P. Huntington(1927 – 2008), the author of the concept of Cleft country expressed this view, the idea of Pax Americana means that:
"a world without US primacy will be a world with more violence and disorder and less democracy and economic growth than a world where the United States continues to have more influence than any other country in shaping global affairs. The sustained international primacy of the United States is central to the welfare and security of Americans and to the future of freedom, democracy, open economies, and international order in the world."
Similar ideas were expressed in 1998 book The Grand Chessboard American Primacy And Its Geostrategic Imperatives by Zbigniew Brzezinski. From one of Amazon reviews:
- The defeat and collapse of the Soviet Union was the final step in the rapid ascendance of a Western Hemisphere power, the United States, as the sole and, indeed, the first truly global power..."
- "Two basic steps are thus required: first, to identify the geostrategically dynamic Eurasian states that have the power to cause a potentially important shift in the international distribution of power and to decipher the central external goals of their respective political elites and the likely consequences of their seeking to attain them;... second, to formulate specific U.S. policies to offset, co-opt, and/or control the above..." (p. 40)
- - "...To put it in a terminology that harkens back to the more brutal age of ancient empires, the three grand imperatives of imperial geostrategy are to prevent collusion and maintain security dependence among the vassals, to keep tributaries pliant and protected, and to keep the barbarians from coming together." (p.40)
- - "Henceforth, the United States may have to determine how to cope with regional coalitions that seek to push America out of Eurasia, thereby threatening America's status as a global power." (p.55)
- - "America is now the only global superpower, and Eurasia is the globe's central arena. Hence, what happens to the distribution of power on the Eurasian continent will be of decisive importance to America's global primacy and to America's historical legacy." (p.194)
- - "That puts a premium on maneuver and manipulation in order to prevent the emergence of a hostile coalition that could eventually seek to challenge America's primacy..." (p. 198)
- - "The most immediate task is to make certain that no state or combination of states gains the capacity to expel the United States from Eurasia or even to diminish significantly its decisive arbitration role." (p. 198)
- - "For Pakistan, the primary interest is to gain Geostrategic depth through political influence in Afghanistan -- and to deny to Iran the exercise of such influence in Afghanistan and Tajikistan -- and to benefit eventually from any pipeline construction linking Central Asia with the Arabian Sea." (p.139)
And ponder the meaning of these statements in a post-9-11 world:
- "Moreover, as America becomes an increasingly multi-cultural society, it may find it more difficult to fashion a consensus on foreign policy issues, except in the circumstance of a truly massive and widely perceived direct external threat." (p. 211)
- "The attitude of the American public toward the external projection of American power has been much more ambivalent. The public supported America's engagement in World War II largely because of the shock effect of the Japanese attack on Pearl Harbor. (pp 24-5)
While this is typically associated with neocon thinking, it is shared belief of the majority of the US elite. In 1992, the US Defense Department, under the leadership of Secretary of Defense Dick Cheney [later to be George Bush Jr.’s VP], had the Pentagon’s Under Secretary of Defense for Policy, Paul Wolfowitz [later to be George Bush Jr.’s Deputy Secretary of Defense and President of the World Bank], write up a defense document to guide American foreign policy in the post-Cold War era, commonly referred to as the “New World Order.” The Defense Planning Guidance document was leaked in 1992, and revealed that,
“In a broad new policy statement that is in its final drafting phase, the Defense Department asserts that America’s political and military mission in the post-cold-war era will be to ensure that no rival superpower is allowed to emerge in Western Europe, Asia or the territories of the former Soviet Union,” and that, “The classified document makes the case for a world dominated by one superpower whose position can be perpetuated by constructive behavior and sufficient military might to deter any nation or group of nations from challenging American primacy.”
Further, “the new draft sketches a world in which there is one dominant military power whose leaders ‘must maintain the mechanisms for deterring potential competitors from even aspiring to a larger regional or global role’.”
As the official state ideology of the USA where it became an integral part of American Messianism it was successfully exported to many countries. And it now permeates many aspects of social cooperation and culture. Like in the USSR the whole generation of people in the USA had growth being brainwashed by this ideology. It dictates an extremely militant almost jingoistic (does not hesitate to exercise force or overthrows the governments), foreign policy (Trotskyites idea of export of revolution in full swing), it is as deceptive as bolshevism (what Washington means by the "spread of democracy" is actually spread of neoliberalism), missionary (regards itself as a monopolist of the "truth" and protector of "universal values" ) and colonizing (serving simultaneously the ideology behind Neocolonialism). Like Communism it is also messianic as in "the end justifies the means" and does not abstain from using dirty methods including black propaganda and color revolutions for achieving its goals. In the level of hypocrisy and methods used against "natives" it reminds British empire or the USSR (your choice ;-).
It blackmails antagonists as depraved, primitive, and below par. A good sample of neoliberal blackmail can be extracted from the US press coverage of preparations to Iraq war( US press enlists for war on Iraq) and Libya coup d'état. Another good set of samples provides Guardia press coverage of Putin's Russia and Ukraine EuroMaidan events. Funny but Russia occupies the middle ground between neoliberalism and resource nationalism, so in principle it coul be an alli of the USA and GB, but as a large country and possible geopolitical opponent it also was in crosshairs of the US elite. One of the reasons for Russia's defeat in Chechnya between 1994 and 1996, was an attempt by America in the 1990s, with tremendous help from the comprador part of Russian elite it managed to create, to turn Russia into a standard neoliberal vassal state, whose elites would be subservient to the US foreign policy and would exist to export raw materials to the West and to transfer money to Western bank accounts. That attempt failed with Putin coming to power. So now the level of animosity from the USA and British elites and serving them MSM now goes over the roof .
With the notable exception of the USA itself, neoliberalism is hostile to nationalism. That does not exclude flirting with neo-fascist elements in countries were neoliberalism is under attack from the left or from the resource nationalists. But those forces are viewed more like tactical allies (Ukraine is a good example) and can be thrown under the bus, when they do their dirty job. Inside the USA, the holy city of neoliberal ideology, it to a certain extent merged with American Exceptionalism; the USA is viewed as exemplarity neoliberal country, the shining city on the hill which has right to impose their views and interests on the rest of the globe with impunity, standing outside the law.
While welfare state presuppose redistribution of income down, the "free market capitalism" presupposes even more powerful redistribution of income up, toward the most wealthy part of the population.
Unlike previous revolutions (with the exception of Bolsheviks revolution) the unique feature of neoliberal revolution is drastic lowering the standard of living of middle class and poor, along with dramatic enrichment of top 1% of population and international corporations. Standard of living of top 20% also grow, albeit not so dramatically. In a way it is equivalent to selling of local population into slavery to international corporations by local oligarchy. with the interesting Pareto style 80:20 split. In other words only 20% of population get something from neoliberal revolution with over 50% concentrated at, way, the top 5%, and lion share in top 1%. This "top 20%" of beneficiaries constitute "fifth column of neoliberalism" in the particular state.
Lower 80% of population standard of living typically dramatically drops after neoliberal revolution and never recover. That does not mean that those capitalists who favor "national" development are considerably less brutal in exploiting lower 80% population, but at least the "spoils" of this exploitation are left by and large in the country and used to improve infrastructure, housing, education and such while neoliberal model of exploitation often is sucking the vassal states dry. Former Eastern European countries such as Bulgaria, Rumania and Serbia provide especially interesting and educational example of how neoliberalism deforms the economy and impoverish population. Especially Bulgaria, this basket case of Europe.
There are some exceptions like China (which practice not pure neoliberalism bus a mixture of neoliberalism with national development, kind of "neoliberalism with Chinese face" ;-), but even in China this process of dramatic enrichment of top 1% is clearly visible although it is not accompanied with drastic lowering of standards of other 99% of population like happened in Russian, Ukraine and other post Soviet republics. Again in the level of decimation of local middle class and poor neoliberal revolutions have a lot in common with Bolshevik's revolution in Russia of 1917.
Here is a quote from insightful Amazon review by razetheladder of Chalmers Johnson book Blowback The Costs and Consequences of American Empire:
Johnson's strength is in recounting the specificities of US foreign policy; he's much weaker at an overall understanding of imperialism. He seems to think that American policymakers have naively built up the economic strength of their Japanese, Korean, and now Chinese competitors by focusing on maintaining their own military power. This is an old critique, resting on the notion that imperialism hurts the imperialists.
But Johnson is relying on the idea that "America" is a unitary entity, so that the hollowing out of industry hurts "America", not specific social groups within the country. In reality, US foreign policymakers work to advance the interests not of "America", but of those same business elites that have benefited from turning Asia into the world's sweatshop and undermining the unions that built their strength on American industry. American economic imperialism is not a failed conspiracy against the people of Asia, but an alliance between American elites and their Japanese, Korean, Indonesian, and Chinese counterparts - against the potential power of the working majority in all those countries.
But it's more complex than that, too, since the US seeks to prevent the emergence of an independent military challenge (especially China, but also Japan) to its Asia hegemony while seeking to expand the power of American commercial interests in the region, even as it tries to keep Asian elites happy enough with the status quo to prevent their rebellion against it.
Neoliberalism as an ideology can be succinctly defined as "Transnational elites Uber Alles". But it uses the concept of elite on the level of the of the countries too. Neoliberalism distinguishes between to types of countries, and. respectively, there are two forms of neoliberalism, one for G7 countries (elite) where while squeezing middle class it operates with "velvet gloves", and a more brutal practice from "prols" countries outside G7 (vassal countries with local elites as fifth column of globalization). Neoliberalism relies mainly on financial mechanisms and banks and use brute force only as a secondary weapon for subduing people and minor countries (you can get much farther with a kind neoliberal word and cruise missiles, then with just kind neoliberal word alone). In time, it generally coincides with computer and Internet revolution, which made globalization of labor via outsourcing of production and services to poor countries much more attractive.
In principle we can define two distinct types of neoliberalism: one for elite countries and the other every other country:
It is the same good old strip-mining of foreign natural and labor resources practiced by Spain, France and Great Britain. Installation of a puppet, fifth column based government guarantee the foreign financial interests which are the highest priority of the new regime ("government of national treason" as Yeltsin gang was called in Russia). Since 1980th neoliberalism led to levels of poverty of the bottom half of the population of peripheral countries which remind A Reversion to a Dickensian Variety of Capitalism. In Russia under Yeltsin gang it was probably even worse. In all cases, it stimulated tremendous growth of inequality in already poor countries and complete dominance of the economy by major transnational corporations and banks. It does not produce real growth with few notable exceptions (China, parts of South East Asia, Brazil). Nowhere this "neoliberal stagnation" is more visible as in Latin America which was the neoliberalism lab since early 80th. Even Chile, a country with rich mineral resources, the poster child of neoliberalism in Latin America has in 2012 officially 14% of population living below the poverty level ( Economist, 2012 ) with street children, prostitution and other associated vices (how-to-tackle-street-child-poverty-in-chile) Even worse situation existed in 1991-2000 in Russia and other xUSSR countries that got under neoliberal steamroller in 1990th. It was a real economic rape.
Actually some elements of the idea of "national superiority" were preserved by reserving for the USA special "shining beacon on the Hill" status (American Exceptionalism) and in a form superiority of "creative class" which includes capitalists, financial oligarchy, and "executives" (top layer of transactional corporate elite) plus narrow social strata of people who are serving them (and that includes most journalists, programmers and IT staff, and such).
In a way, neoliberalism considers this so called "creative class" to be a new Arian race. Everybody else are Untermensch and should be treated as disposables. In other words it is more like a religion that claim supremacy of particular ethnic group or a class. See for example a Guardian reader comment made in 2011 (you need to brose the comments as direct link does not work; recently Guardian screwed its comment system completely):
ITS1789 13 Sep 2011 14:15
I'm not from the left, and I personally do really, really well out of the capitalist system, and enjoy a life of relative luxury, but then I can afford to give half my annual income away to charity and still live very well. I like capitalism, it's been very good to me, and my family for over two centuries, but the ghastly version that's swept the world over the last thirty years is something else.
I think neoliberalism is something close to a malignant cancer growing inside a healthy capitalism, and with equally disastrous consequences. So my criticism comes not from the left, but from the right, for what that's worth.
Neoliberalism is a kind of pseudo-religion, a dogma, which is passionately believed by its disciples, despite the evidence showing that it simply doesn't work in the real world, but like most religious fanatics, the real world doesn't matter much to them. Which is another reason they remind me of Stalinists in the old Soviet system.
... ... ...
For me neoliberalism is a primitive and dangerous delusion about society, economics, and human nature, comparable to extreme forms of socialism, which are equally hairbrained and destructive, and arguably just as bloody.
Thatcherism was classic, class-warfare politics, but launched from the extreme right instead of the left, and it was wildly successful, at least for those it benefitted, a narrow strata at the top of society. Now that the entire charade is collapsing, and taking the welfare state, the middle class, and probably capitalism itself, with it, it's time to pay the bill for this long, illusory, party.
There essence of neoliberalism is not only dominance of finance over other sectors of the economy, but also free movement of goods and people by global corporations without any respect for national borders. And that is the source of increasing efficiency and dropping prices on many categories of goods. An interesting question is how much the rise of neoliberalism was forced on humanity by the short historical period of availability of cheap hydrocarbons.
"Cheap Energy" is important driver of globalization. Even the previous stage of globalization: the creation of colonial empires by Great Britain, France, Germany and Spain was at least partially based on availability of steam power and coal.
Now it is an oil that serves the same role for the global neoliberal empire. The latter allow cheap global transportation, mass air travel and powers huge US military machine which has no equals in the globe and serves as a guarantor of security of neoliberal regimes all over the globe. Out of three major components of globalization -- the US as a sole superpower, cheap international shipping and air travel, and (to lesser extent) global telecommunication networks the first two definitely depends of cheap energy. And, BTW, Google is also not running of holy spirit; it is one of the top consumers of electrical energy in the USA.
While it is unclear to what extent neoliberalism will be affected by rising energy prices, it seems few things arouse more passions these days then "oil plato" (or how it is often, but incorrectly, called the oil peak) and how it affects the civilization and different countries. The key fact is that EROEI (energy return on energy invested) of oil extraction is rising dramatically for the last two decades and it looks like this trend will continue. The current world oil production has EROEI around 40 so you extract forty times as much of energy then you spend for extraction.
New oil discoveries have EROEI around 10 (with bitumen oil sand EROEI in single digits). And EROEI also the source of the current disconnect between the purchasing power of money and the resources available to back that up. Pessimists say that a further increase in fuel prices is inevitable, and sooner or later the world will face a kind of "offshoring apocalypse". That's unlikely as important part of neoliberal regime is the new level of global communications and this part will be by-and-large intact. But transportation costs will affect the globalization in a negative way without any dount. For example with EROEI in single digits mass air travel will come to a screeching halt.
At the same time the end of cheap hydrocarbons era might marks the start of fuel wars, which, as such, will be a drastic reversal of globalization, playing the same role as WWI. When each state will try to pull the energy blanket, globalization trends will definitely suffer.
Rise of cost of energy makes both offshoring of manufacturing and outsourcing of service jobs to other countries less viable. A growing number of American companies are moving their manufacturing back to the United States. This emerging "re-shoring movement" has to be kept in proportion. Most of the multinationals involved are bringing back only some tiny fraction of their production destined for the American market. Much of what they had moved over the past few decades remains overseas. Moreover some firms like Caterpillar decided to move research and development facilities in China as split between manufacturing and research badly affects both research and the quality of final products.
But re-shoring tendencies can't be easily dismissed. They are driven by powerful forces which might only get stronger with time. Boston Consulting Group (BCG) in April 2012, notes that 37% of those with annual sales above $1 billion are planning shifting production facilities from China to America. Of the very biggest firms, with sales above $10 billion, the number reached 48%. Among reason sites are rising Chinese labor costs and transportation costs. Many shipping companies slowed the speed of their ship (increasing the delivery time) in order to fight rising oil prices. As Economist, the flagship of neoliberal establishment thought in GB, noted (Reshoring manufacturing):
The Massachusetts Institute of Technology looked at 108 American manufacturing firms with multinational operations last summer. It found that 14% of them had firm plans to bring some manufacturing back to America and one-third were actively considering such a move. A study last year by the Hackett Group, a Florida-based firm that advises companies on offshoring and outsourcing, produced similar results. It expects the outflow of manufacturing from high- to low-cost countries to slow over the next two years and the reshoring to double over the previous two years. “The offshoring of manufacturing is now rapidly moving towards equilibrium [zero net offshoring],” says Michel Janssen, the firm’s head of research.
By contrast, pay and benefits for the average Chinese factory worker rose by 10% a year between 2000 and 2005 and speeded up to 19% a year between 2005 and 2010, according to BCG. The Chinese government has set a target for annual increases in the minimum wage of 13% until 2015. Strikes are becoming more frequent, and when they happen, says one executive, the government often tells the plant manager to meet workers’ demands immediately. Following labour unrest, wages at some factories have gone up steeply. Honda, a Japanese carmaker, gave its Chinese workers a 47% pay rise after strikes in 2010. Foxconn Technology Group, a subsidiary of Hon Hai Precision Industries, a Taiwanese firm that does a lot of manufacturing for Apple and other big technology firms, doubled pay at its factory complex in Shenzhen after a series of suicides. Its labour troubles are still continuing.
...As soon as 2015, says Hal Sirkin, a consultant at the firm, it will cost about the same to manufacture goods for the American market in certain parts of America as in China in many industries, including computers and electronics, machinery, appliances, electrical equipment and furniture. That calculation takes into account a wide variety of direct costs, including labour, property and transport, as well as indirect ones such as supply-chain risk.
...“Pay for senior management in several emerging markets, such as China, Turkey and Brazil, now either matches or exceeds pay in America and Europe”
So while production and service outsourcing overseas or offshoring can still provide substantial cost savings for many companies, the question arise whether those cost savings are sustainable (Can outsourcing overseas provide sustainable cost savings).
Crisis of 2008 undermined the legitimacy of neoliberalism much like WWII undermined the legitimacy of communism. But alternatives did not exits and instead of wreaking neoliberalism it converted it is aggressive, bloodthirsty zombie stage, which is the current stage of neoliberalism development (see below). It is interesting to note that three competing perspectives on the crisis do not include the role cheap hydrocarbons in development of neoliberalism and the crisis of 2008 (Palley, 2012, cited via thomaspalley.com):
Market fundamentalism is an ideology of neoliberalism and represents a pseudo-scientific approach to economic and social policy based on neoclassical theories of economics that absolutized the role of the private business sector in determining the political and economic priorities of the state and consider privatization as the ultimate solution of all problems in the society.
Like social theories behind Italian and German versions of corporatism ideology of neoliberalism is pretty eclectic. It is discussed at some additional length at pages related to the topic Casino Capitalism on this site.
We need to note, there the neoliberal ideology adoption and implementation patterns varies from country to country, like it was actually with the classic corporatism as well. In the USA this form of corporatism emerged in most radical form. Another center of neoliberalism was GB in which it also has had a more radical form then, say, in Spain or Italy.
And we called the US version of neoliberalism radical, it is not a metaphor: corporatism under General Franco is a pale shadow of corporatism under Bush-Obama regime.
This new stage of capitalism development is often called "corporate socialism" of "socialism for rich" or "socialism for banks". The latter name is applicable because the key component of transnational elite is financial oligarchy. All of those terms reflect the key fact that at this stage of capitalism development it is the transnational elite and first of all financial oligarchy which completely dominates power structures of the society. Due to the role of financial oligarchy in this new elite this social system was also nicknamed Casino Capitalism.
Neoliberalism should probably be viewed as a further development of a form of corporatism that emerged in the USA in late 60th. It came to power in Ronald Reagan administration which was in a way Quiet coup. And it became completely dominant after the collapse of the USSR during Clinton regime during which Democratic Party also adopted neoliberalism as an official platform.
The term itself emerged in the 1970s, when some Latin American economists began using "neoliberalism" to designate their program of market-oriented reforms. It has come into wide use starting with 1973 Chilean coup d'état. After triumph of neoliberalism in Chile under Augusto Pinochet (from 1973) neoliberalism spread to Great Britain under Margaret Thatcher (from 1979) and then to the United States under Ronald Reagan (from 1981). Broadly speaking, neoliberalism seeks to transfer control of the economy from the public to the private sector with the state providing guarantees only to corporations and not to individual citizens like under socialism. That's why is often called "corporate socialism".
After dot-com bust of 2000-2002, however, the term "neoliberalism" had become a pejorative used to denigrate prostitution of economics performed by Milton Friedman and Chicago school . This trend increases after financial crisis of 2008-2012. So it is probably fare to say that right now neoliberalism entered the stage of decline. The last important victory of neoliberalism was probably navigating Russia into joining WTO, which happened in summer of 2012.
It has neoliberal Newspeak that include such terms as "free market", efficiency, consumer choice, transactional thinking and individual autonomy. In essence this is an modernized ideology of merger of state and corporate power that was hallmark of classic corporatism, with an additional twist of emphasizing the Arian style theories of inferiority of lower classes (reflected in promoting the "class of creators", entrepreneurs( Randism), etc) and "ultimate justice" of redistributing wealth to the top 1%.
On state level it tries to abolish social programs and completely shift the risks to individuals (replacing pensions with 401K plan in the USA), while fully providing social protection to corporations, especially financial giants involved in casino style gambling. In other words it socialize private losses and privatize social program that benefits of individual citizens.
Neocolonial aspects of neoliberalism are often called "Washington Consensus", a list of policy proposals that appeared to have gained consensus approval among the Washington-based international economic organizations (like the International Monetary Fund (IMF) and World Bank) and directed on making developing nations "debt slaves" of the industrialized nations. This policy got tremendous impetus with the dissolution of the USSR when the principal foe, which to certain extent limited the level of greed in such deals due to fear of "communist infiltration" if case deal is too one sided, folded.
The concept and name of the Washington Consensus were first presented in 1989 by John Williamson, an economist from the Institute for International Economics, an international economic think tank based in Washington, D.C. The list created by Williamson's included ten points:
As we mentioned before, the greatest triumph of neoliberalism was the dissolution of the USSR in 1991. After this event, there was a period of "triumphal march of neoliberalism", which lasted probably till 2005, when each year it claimed as a victory yet another country (Yeltsin neoliberal gang rule in Russia lasted till 2000, all former socialist countries were converted to neoliberal regimes shortly after, Kosovo in 1999; Serbia in 2000; Iraq in May, 2003; Georgia in December 2003; Ukraine in 2004). It also managed to stabilize and improve the situation in the USA. Plunder of Russia and other xUSSR states along with Internet revolution were two factors that influenced relative prosperity of the USA in 1994-2000.
And like Catholicism in Europe in Middle Ages, in 90th neoliberalism looked like an incontestable ideology propagated by "sole superpower" (" anew holy Roman Empire") with the help of vassals and subservient financial institutions such as World Bank and IMF. The dominance on the USA in 1991 looked rock-solid and if somebody told me in 1999 that in less then 20 years the USA would be on ropes both politically and financially I would just laugh. Still after the dissolution of the USSR neoliberalism managed to dissipate most of the gains in approximately 20 years and in 2008 entered the phase of structural crisis. As of 2013 the idea of self-regulating market is dead and even solidarity of international elites, the hallmark of neoliberalism, is under question.
The first cracks in neoliberalism facade were caused by Clinton's attack on Yugoslavia in 1999, the first armed neoliberal crusade attempted under the smoke screen of protecting the right of Kosovo Muslims in Serbia. It failed to implement "regime change" in Serbia and despite overwhelming military superiority of NATO forces has shown that bringing neoliberal regime on the tips of bayonets is a costly and high risk exercise. It took another several years and a color revolution in Serbia to achieve those goals. It did established the second Muslim state in Europe (effectively NATO protectorate), which was a part of the plan.
Color revolution in Serbia started a series of other successful color revolutions in Serbia (Serbia's Bulldozer Revolution in 2000) ,Georgia (Saakashvili regime came to power in November 2003 as a result of "Rose revolution"), Ukraine (Viktor Yushchenko regime came to power in 2004 via Orange Revolution) and several other countries.
After those successes, there were several setback: color revolutions failed in Belorussia and Russia. Results of color revolution in Ukraine were partially reversed by government of Viktor Yanukovych who ousted Yushchenko government defeating Yulia Tymoshenko in 2010 election (with Yutchshenko personally having less the 3% support). They are close to partial reversal in Georgia where Saasaskvily regime is hanging in the air.
Politically neoliberalism correlates with growth of political power of financial oligarchy and media-military-industrial complex. Growth of political power of financial oligarchy among national elite has led to the dramatic growth of inequality and created growing fear of the top 0.01% (oligarchs) over preserving their power and financial gains.
That naturally leads to the establishment of National Security State" state, militarization of police and introduction of total surveillance over the citizens under the pretext of fighting against terrorists.
In the article GCHQ taps fibre-optic cables for secret access to world's communications by Ewen MacAskill, Julian Borger, Nick Hopkins, Nick Davies and James Ball, the authors describe blanket surveillance regime (21 June 2013, The Guardian) in comparison with which KGB and even STASI looks like complete amatures:
Britain's spy agency GCHQ has secretly gained access to the network of cables which carry the world's phone calls and internet traffic and has started to process vast streams of sensitive personal information which it is sharing with its American partner, the National Security Agency (NSA).
The sheer scale of the agency's ambition is reflected in the titles of its two principal components: Mastering the Internet and Global Telecoms Exploitation, aimed at scooping up as much online and telephone traffic as possible. This is all being carried out without any form of public acknowledgement or debate.
One key innovation has been GCHQ's ability to tap into and store huge volumes of data drawn from fibre-optic cables for up to 30 days so that it can be sifted and analysed. That operation, codenamed Tempora, has been running for some 18 months.
GCHQ and the NSA are consequently able to access and process vast quantities of communications between entirely innocent people, as well as targeted suspects.
This includes recordings of phone calls, the content of email messages, entries on Facebook and the history of any internet user's access to websites – all of which is deemed legal, even though the warrant system was supposed to limit interception to a specified range of targets.
As Glenn Greenwald wrote in his article Are all telephone calls recorded and accessible to the US government? (May 4, 2013, The Guardian):
Every day, collection systems at the National Security Agency intercept and store 1.7 billion e-mails, phone calls and other types of communications.
It would also help explain the revelations of former NSA official William Binney, who resigned from the agency in protest over its systemic spying on the domestic communications of US citizens, that the US government has "assembled on the order of 20 trillion transactions about US citizens with other US citizens" (which counts only communications transactions and not financial and other transactions), and that "the data that's being assembled is about everybody. And from that data, then they can target anyone they want."
Despite the extreme secrecy behind which these surveillance programs operate, there have been periodic reports of serious abuse. Two Democratic Senators, Ron Wyden and Mark Udall, have been warning for years that Americans would be "stunned" to learn what the US government is doing in terms of secret surveillance. Strangely, back in 2002 - when hysteria over the 9/11 attacks (and thus acquiescence to government power) was at its peak - the Pentagon's attempt to implement what it called the "Total Information Awareness" program (TIA) sparked so much public controversy that it had to be official scrapped. But it has been incrementally re-instituted - without the creepy (though honest) name and all-seeing-eye logo - with little controversy or even notice.
In his book "Brave New World Order" (Orbis Books, 1992, paper), Jack Nelson-Pallmeyer identifies seven characteristics of a such a state:
You can probably safely replace the term "military" with the term "finance" in the above list to make it more applicable to contemporary neoliberal societies. And if you think about, it finance is a new form of warfare. In any case National Security State is now reality and by-and-large displaced the previous form, called Inverted Totalitarism which existed from late 40th to late 80th.
The fact the neoliberalism is highly criminogenic is well established. The postulate "greed is good" implicitly assumes that the legal system is perfect. In order to distinguish greed from enlightened self-interest, we will define greed is self-interest taken to an extreme or unseemly degree. A “greedy” market participant that seeks to gain at the expense of others and the society at large. So in essence this is a parasitic behavior. This might be done within the legal framework exploiting loopholes in it, but most commonly it involves a violation of the law that is difficult to enforce and are supported internally by corporate brass (A Troubling Survey on Global Corruption - NYTimes.com):
A new survey of corporate officials and employees in 36 countries — in Europe, Africa and the Middle East, as well as India — indicates that there is plenty of corruption that needs investigating.
Over all, 20 percent of the respondents said they knew of incidents at their own companies within the previous year that could be construed as cooking the books — moves to either understate expenses or overstate revenue. Among senior managers and directors, the figure was 42 percent.
It is typically difficult to determine what the optimal set of laws is; lawmakers must make their best guess, and in most cases they pass laws that are proved to be suboptimal over time. Holes in those laws can be systematically exploited. Also law always lags behind market and technological developments; it is difficult for lawmakers to know how to regulate things like new products or new investment vehicles. That creates another opportunity to engage in destructive for the society as whole behavior without fear of punishment by the law. Neoliberalism also is "sociopath friendly" regime in a sense that sociopathic qualities became a desirable for the top brass. And with sociopathic leadership in place it is difficult to imagine what the improper business is. "Creative destruction" in this case becoming something like a pack of wolves against a sheep.
Wall Street also developed two step combination: first weaken the law, and then engage in criminal behavior that is now decriminalized. In other words, if one argues that it is perfectly acceptable for people to be greedy, the problem is that there is no mechanism to constrain greedy people so that they can do no harm to others. As history demonstrates pretty convincingly (with the 2008 crisis as the most recent example), the legal system typically fails to place the appropriate constraints on such market behavior. That's why additional mechanisms are important for society survival and prosperity, and that's why most world religions consider greed to be a vice. This brings us to works of John Kenneth Galbraith and his discussion of the necessity of countervailing economic forces. Neoliberalism destroyed those countervailing forces over the last several decades.
Since the legal system can not and never in reality guarantee that markets function efficiently, there is a role for other institutions to foster a more enlightened self-interest as a social norm and thus improve efficiency. It's mostly about how self-interest is channeled that makes the difference, since eliminating self-interest seems similarly sociopathic (the USSR is a perfect example here). We would be a lot better off to channel self-interest in financial sector productively, than let it run wild foraging on speculation, arbitrage, and monopolization.
But it is those institutions that can channel self-interest in a more productive way, that neoliberalism systematically tries to weaken. In this sense neoliberalism is not only criminogenic, it is self-destructive. Moreover, unethical behavior is arguably more of the rule of corporate conduct rather than the exception. As such it represents a systemic flaw of neoliberalism as a flavor of corporatism. And the Great Recession of 2008 is a direct manifestation of this systemic flaw. In other words it was not accidental, it was not the first and it is not the last.
Example of Russia neoliberal revolution of 1989-1994 is probably one of the most terrifying examples of this trend. But the situation in the USA after 2008 is structurally even worse as it entails much more sophisticated layers of corruption and first of all almost complete corruption of the government by financial oligarchy (nobody was prosecuted for the financial crisis of 2008). It signified the creation of two separate caste of citizens with the upper caste being above the law, much like it was with Nomenklatura in the USSR.
Neoliberalism also exploits fundamental problem that in any large bureaucracy dealing with huge sums of money people have bad and/or contradictory incentives and lack of accountability creates opportunity for corruption. So in way it is using corruption for the purposes of maintaining the neoliberal regime, which is pretty unique feature. And, despite appearance, all large bureaucracies are prone to corruption.
One of the key mechanisms of corruption that is used under neoliberal regime is so called "the revolving door". It works in both direction: from top corporate seats to government and back.
Typically people who moved to government from private industry are not forgetting your former friends, especially in crisis (Paulson is a very good example here, but any Secretary of Treasury probably is not much worse example either). There are also implicit incentives to help your former employer, when there is an opportunity for a multimillion dollar deal. Also in this variant of "revolving door" regime, those who are coming to the government or to the public service have the incentive structure and morale they acquired in their prior employer -- a large corporation.
When a long time government servant is expecting to join a corporation after leaving the government there is a strong, but implicit incentive not to hurt future friends. Income inequality is probably one of the root causes for this. If incomes in public and private sector were not so much out of balance, few people would be motivated to sell themselves out so shamelessly.
But with the current level on income inequality this mechanism works wonders to emasculate regulatory agencies top brass. The mechanism that efficiently replicates this governance systems and keeps it in place one of the central part of criminality of neoliberalism: the conscious breaking down of institutional capacity of state to regulate business activity. Thus creating the situation of "mafia state", with the oligarchy instead of regular Mafiosi.
The other key mechanism is bribing the press corps to present (often close to criminal) actions favorable to oligarchy (in a words of Margaret Thatcher), as "There Is No Alternative" (TINA). BTW in Russian "tina" is the highly viscosious, amorphous substance on the bottom of the lake or swamp. In the latter case it can swallow people or animals. This effect is the same as for "Neoliberal TINA". Typically "TINA" works by remapping the debate to exclude anything not favorable to the financial elite (Journalists in the service of Pete Peterson Remapping Debate). Here is how stealing from Social Security to preserve recent gains by financial elite was presented during debates on (note the terminology) "curbing the country’s “unsustainable” debt and deficits.":
Peterson, however, is hardly a disinterested and dispassionate observer of such discussions. In fact, he is now beginning his fourth decade of arguing that there is no alternative to enacting “entitlement reform” (read: cut Social Security and Medicare) and “tax reform” (read: raise regressive taxes and lower progressive ones) in the name of curbing the country’s “unsustainable” debt and deficits.
- Maria Bartiromo, 2011 (host, CNBC’s “Closing Bell with Maria Bartiromo”)
- Tom Brokaw, 2012 (former anchor and managing editor, NBC Nightly News)
- Erin Burnett, 2012 (host of CNN’s “Erin Burnett OutFront”)
- John F. Harris, 2012 (editor-in-chief of Politico)
- Gwen Ifill, 2011, 2010 (senior correspondent of “PBS NewsHour”)
- Ezra Klein, 2011 (columnist, Washington Post)
- Jon Meacham, 2010 (former editor-in-chief, Newsweek)
- Bob Schieffer, 2010 (host, CBS “Face the Nation”)
- Lesley Stahl, 2010 (reporter, CBS “60 Minutes”)
- George Stephanopoulos, 2012 (host, ABC’s “This Week”)
- David Wessel, 2012, 2011 (economics editor, Wall Street Journal)
- George Will, 2011 (columnist, Washington Post)
- Judy Woodruff, 2012, 2011 (host, “PBS NewsHour”)
An essential and successful element of the Peterson strategy is to create an environment where it is widely if not universally believed that there is no alternative to his vision. The conceit is that those with “courage” will see past narrow, partisan concerns and embrace an ideal: a bipartisan consensus that has the strength to demand “shared sacrifice” from a childish and selfish populace. A review of the proceedings of the Fiscal Summits of the last three years makes agonizingly clear that most of the journalists who conducted interviews or moderated panel discussions both reflected and amplified the Peterson worldview...
So, for example, Lesley Stahl, the CBS “60 Minutes” reporter, was fully a part of the Erskine Bowles and Alan Simpson deficit-cutting team during her interview with both men: “You are going to have to raise taxes and cut things, big things, put restrictions on Social Security. Everybody knows that.”
Virtually none of the reporters thought to ask about or suggest an alternative path, such as preserving Social Security benefits and bolstering the system’s reserve by raising the cap of wages subject to Social Security taxes (currently annual wages above approximately $110,000 are not subject to any Social Security tax).
And most questioning proceeded either on the false assumption that deficits were derived from excessive spending on entitlements or as though they had mysteriously, but inevitably, come to pass.
Many journalists fairly shouted their personal desire to see greater cooperation and “compromise,” with groups realizing the importance of submerging their interests to the greater good. Who should do the submerging? In 2012, Tom Brokaw had a suggestion in the form of a question to former President Bill Clinton: after Wisconsin Governor Scott Walker pushed through a bill undermining the right of union members to collectively bargain, shouldn’t those workers have just sat down and negotiated with Walker as, Brokaw said, “has been traditionally done in this country” instead of “gather[ing] outside the capitol”?
There were a couple of exceptions to the rule. In a session moderated by Ezra Klein of the Washington Post in 2011, Klein posed a number of questions that reflected an unwillingness to operate from within the Peterson framework. For example, Klein asked New York Times columnist David Brooks whether, instead of blaming Americans for simply wanting benefits without paying for them, the causes of the debt should be located in the Bush tax cuts, two unfunded wars (Iraq and Afghanistan), and the federal government’s emergency response to the financial crisis.
Judy Woodruff, of the PBS NewsHour, generally asked questions from within the Peterson frame, but, at one point in 2012, posed a question that perhaps all the journalists should have been thinking about as well. She asked Rep. Christopher Van Hollen, Jr. (D-Md.) if “Democrats like you, by participating in forums like this one that is all focused on austerity, on cutting the deficit and the debt…really become also window dressing for a conservative agenda that is anti-jobs and anti-recovery and wrongheaded economics?”
Over the course of the three years of fiscal summits that Remapping Debate examined, the other journalist interviewers and moderators hewed strictly to the conventional Peterson wisdom. What follows are annotated illustrations of this recurring problem.
Although neoliberal regime is not necessarily a kleptocracy (although Yeltsin regime definitely was), the difference is only in a degree. It does use corruption and criminality to stabilize the neoliberal regime and protect it from backlash that follow economic crisis caused by excessive appetite by financial oligarchy (if I am sounding like a communist here it is not accidental; as people of former USSR observed: communism was all wrong about socialism, but it was surprisingly realistic in its views of capitalism). And as for corruption it is pretty ironic that the USA tried to position itself as a leader of anti-corruption crusade, because as Niall Ferguson noted (quoted from Zero Hedge):
“It is corruption when corporations can buy regulation. It is corruption when laws are sponsored by Wall Street.”
It is a sad state when the current level of corruption of the U.S. government is what was once only associated with third world countries ruled by dictators. The problem is that corruption of major institutions and first of all regulators is predicament for any country which adopted neoliberal model, and the US in no exception. Niall Ferguson called it "suffering from a third world disease.". In his new book The Great Degeneration he states the central question of the “great degeneration” is whether our institutions, and first of all institution which should uphold the rule of law are degenerating. He thinks that there are four symptoms of degeneration:
Quite frankly, like in the case of international financial capital, the most necessary constituents that define organized crime are in place so the difference in only in degree:
Organized crime or criminal organizations are transnational, national, or local groupings of highly centralized enterprises run for the purpose of engaging in illegal activity, most commonly for monetary profit
Quoting Wikipedia:
In the United States, the Organized Crime Control Act (1970) defines organised crime as "The unlawful activities of [...] a highly organised, disciplined association [...]".[3] Criminal activity as a structured group is referred to as racketeering and such crime is commonly referred to as the work of the Mob. In the UK, police estimate organized crime involves up to 38,000 people operating in 6,000 various groups.[4] In addition, due to the escalating violence of Mexico's drug war, the Mexican drug cartels are considered the "greatest organised crime threat to the United States" according to a report issued by the United States Department of Justice.[5]
By all estimates Mexican grug cartels dwarf the size and wealth of the US financial sector.
If you think that the increasing level of penetration of Mexican mafia into the US is the result of external forces think again. In a way Reagan regime was a clear invitations for any self-respectful international crime syndicate to start operating in the US territory. And the exposition of crime that was a side effect of neoliberal counterrevolution in Russia has a distinct blowback effect in the USA. The same reasoning is applicable to various sophisticated financial crimes including computer related. What you expect unemployed or semi-employed for 300 dollars a month programmers to do to in order to provide a living for themselves and their families.
As Will Hutton noted in The Guardian neoliberalism doctrine entail direct propaganda of amorality( Across Europe, political leaders have lost the trust of their people:
There was a time when to live a life virtuously was well understood. It embraced personal integrity, commitment to a purpose that was higher than personal gain, a degree of selflessness and even modesty. Those at the top may have got there through ruthlessness and ambition, but they understood that to lead was to set an example and that involved demonstrating better qualities than simply looking after yourself.
No more. Perhaps the greatest calamity of the conservative counter-revolution has been the energy it invested in arguing that virtue, whatever its private importance, has no public value. The paradox, the new conservatives claim, is only through the pursuit of self-interest can the economy and society work best. Responsibilities to the commonweal are to be avoided.
The retreat of virtue has become the plague of our times. Greed is legitimate; to have riches however obtained, including outrageous bonuses or avoiding tax, is the only game in town. But across the west the consequences are becoming more obvious. Politics, business and finance have become blighted to the point that they are dysfunctional, with a now huge gap in trust between the elite and the people.
In the USA it took more then three decade to eliminate morality and to establish "law of jungle" mentality in the population. In other countries such as Russia this process was much quicker and run deeper. And in no way this newly acquired level of criminally is reflected in incarceration statistics. Most of "neoliberal-style: crimes are financial crimes and as such they are difficult to direct and difficult to procedure. sometimes they are impossible to procedure either because of the political influence of the players or potential effect on the economy if particular persons and institutions are brought to justice. The latter factor was acknowledged by the US justice department.
Neoliberalism propagates criminal behavior by creating acute means-ends discrepancies and due to excessive cultural emphasis on monetary or material success goals ("greed is good" mentality) for members of society. At the same time mobility is restricted and majority of members of the society has no realistic chances to attain those goals. Still media brainwashing incites the desire more than they have. Success stories of going from rags to riches make the American Dream more believable, despite the fact that it is deeply and irrevocably fake. As this cultural meme is internalized it creates a strain, which combined with the culturally induced underemphasize on the proper methods, stimulates deviance of various types. If the deviant solution is successful (i.e., perpetrators are not caught or adequately punished), this adaptation may become normative for others in a similar social context. To the extent that this solution is available to them (demand for illicit goods or services, access to illegitimate opportunity structures), they may adopt this role model -- and may be expected by their significant others to follow this path. This process creates a vicious circle toward higher rates of deviance and widespread anomie under neoliberal regime. Anomie is a withdrawal of allegiance from conventional norms and a weakening of these norms' guiding power on behavior. This is caused by structural contradictions within the neoliberal doctrine and affects deviance in two ways. One is associated with strain, relative deprivation, frustrations, and the almost obsessive focus on goals. This makes deviance thinkable, as conventional norms are regarded as nonbinding, at least temporarily. Rationalizations enable departures from otherwise accepted/internalized social rules, as actors convince themselves that in their particular circumstances an exception is acceptable. Through interactive processes, techniques of neutralization and rationalizations contribute to a context in which newly socialized actors may adopt normative referents and deviant behavior as a matter of course. If "this is the way business is done around here," people may engage in price fixing or misleading advertising or insider trading or running a prostitution ring. While those criminogenic effects of neoliberalism became prominent in the USA as was demonstrated by 2008 financial crisis, when most of financial players involved were engaged is behavior that is deeply and irrevocably asocial and amoral. However, a very similar process is now being reproduced throughout the world. Promises are made that are not fulfilled. People's expectations are exalted at a time when economic and power asymmetries increase and become less justifiable and intolerable in the eyes of the people affected. The logic of the market permeates popular thinking and introduces rationalizations, making the adoption of a criminal or unethical solution more acceptable. This high criminogenic impact of globalization and neoliberal policies is extremely difficult and costly to reverse.
Moral relativism means that anything that helps to achieve the goal is moral. It was actually pioneered by Marxism in context of means to be used to achieve "proletarian revolution". It is a part of Randism as a ersatz version of Nietzschean Philosophy.
Corruption, facilitated by the credibility trap, is the biggest problem facing the West today. That is the real subsidy, the most debilitating entitlement.
It is the belief of the elite that the power of their office is an achievement that rewards them with the right to lie, cheat and steal, both for themselves and their friends.
Although it is most important to understand that they would be shocked and insulted if one uses those words, lie, cheat and steal, to describe what they are doing. They view themselves as exceptionally hard working, as obligated by their natural gifts and superiority.
Through a long indoctrination that starts sometimes in their families, but is most often affirmed in their elite schools and with their circle of privileged friends, they learn to rationalize selective moral behaviour not as immoral but as 'the entitlement of success.' And they are supported by a horde of morally ambivalent enablers who will tell them whatever they wish to hear.
There are one set of rules for themselves and their friends, and another set of rules for the rest.
Few who actually do evil consciously choose to be evil. They rationalize what they do in any number of ways, but the deceit often hinges on their own natural superiority, and the objectification and denigration of the other. We are makers, and they are takers. Although many may work hard, they see their own work as having special value and merit, while the actions of the others are inconsequential and unworthy.
Given enough time, their rationalizations become an ideology, desensitized to the meaning and significance of others outside their own select group. This supremacy of ideology empties their souls, and opens the door to mass privation and even murder, although rarely done by their own hands.
This is what Glenn Greenwald calls 'justice for some.' Or even earlier what George Orwell captured in the slogan, 'Some animals are more equal than others.'
And just to be clear on this, with regard to the Anglo-American political situation, the tragedy is not that just some are corrupted, which is always the case. The tragedy is that the Democrats and the Labor Party learned that they could become as servilely corrupted by Big Money as the Republicans and the Conservative Party, while maintaining the illusion of serving their traditional political base.
And it has rewarded them very well in terms of extraordinarily well-funded political power, and almost unbelievable personal enrichment afterwards.
In such a climate of corruption, political discourse loses the vitality of ideas and compromise for the general good, and take on the character of competing gangs and crime families, engaged in aggressive schemes and protracted turf wars, tottering from one pitched battle and crisis to another.
As Jesse put in his blog Jesse's Café Américain"A credibility trap is a condition wherein the financial, political and informational functions of a society have been compromised by corruption and fraud, so that the leadership cannot effectively reform, or even honestly address, the problems of that system without impairing and implicating, at least incidentally, a broad swath of the power structure, including themselves.The problem which the modern world has not yet grappled is how to react to the rise of a global elite, which considers itself to be above national restraints, and a law unto themselves.
The status quo tolerates the corruption and the fraud because they have profited at least indirectly from it, and would like to continue to do so. Even the impulse to reform within the power structure is susceptible to various forms of soft blackmail and coercion by the system that maintains and rewards.
And so a failed policy and its support system become self-sustaining, long after it is seen by objective observers to have failed. In its failure it is counterproductive, and an impediment to recovery in the real economy. Admitting failure is not an option for the thought leaders who receive their power from that system.
The continuity of the structural hierarchy must therefore be maintained at all costs, even to the point of becoming a painfully obvious, organized hypocrisy.The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.
Their success has been propelled by the dominance of Anglo-American financialization, and the rise of oligarchies in Russia, China, Latin America, and India. Countervailing power has been co-opted and in many cases eliminated. Any opposition has become marginalized and isolated.
The new oligarchs are supported by fiat currencies of respective national goverements, which together the increase of insubstantial 'cashlessness' in wealth. The latter provides much greater ability to reallocate wealth.
Legal arbitrage is a powerful instrument for transnational corporations to press government into compliance. As soon as government tries to impose some restriction on their operations they threaten to leave.
This behavior is by-and-large conditioned by the low price of oil. With price of oil above, say $200 per barrel, transportation costs became big enough to make this behavior less likely
Globalization and deregulation supports selective justice, to the extreme detriment of local legal regimes (outside G7), and individual choice and freedom. The new global elite consider themselves to be a new Arab sheiks, a law unto themselves, above what they consider subhuman restraint. Or using Nietzschean terminology, Übermenschen.
“Our light-speed, globally connected economy has led to the rise of a new super-elite that consists, to a notable degree, of first- and second-generation wealth. Its members are hardworking, highly educated, jet-setting meritocrats who feel they are the deserving winners of a tough, worldwide economic competition—and many of them, as a result, have an ambivalent attitude toward those of us who didn't succeed so spectacularly. Perhaps most noteworthy, they are becoming a transglobal community of peers who have more in common with one another than with their countrymen back home. Whether they maintain primary residences in New York or Hong Kong, Moscow or Mumbai, today's super-rich are increasingly a nation unto themselves...A multibillion-dollar bailout and Wall Street’s swift, subsequent reinstatement of gargantuan bonuses have inspired a narrative of parasitic bankers and other elites rigging the game for their own benefit. And this, in turn, has led to wider—and not unreasonable—fears that we are living in not merely a plutonomy, but a plutocracy, in which the rich display outsize political influence, narrowly self-interested motives, and a casual indifference to anyone outside their own rarefied economic bubble."
Chrystia Freeland, The Rise of the New Global Elite
Being an implementation of the "law of jungles" on international scene with the USA as a 100 pound gorilla, the neoliberal regime has distinct criminogenic character both within the USA (unpunished financial crimes made by top management of leading Wall Street banks and investment firms) and, especially, in "newly liberalized" countries of former USSR ("a New Latin America"). Which is the main "sphere of influence" of international corporations from G7 countries.
Along with internationalization of economies and integration of elites there was internalization of organized crime and growth in sophistication of criminal methods of appropriation of wealth, including those used by international corporations.
In this discussion we will follow key points of the article Global Anomie, Dysnomie, and Economic Crime Hidden Consequences of Neoliberalism and Globalization in Russia and Around the World
IntroductionTRANSNATIONAL CRIME HAS RECENTLY ACQUIRED A PROMINENT PLACE IN PUBLIC debates. It is commonly presented as the most significant Crime problem at the turn of the millennium (Myers, 1995-1996; Shelley, 1995). Many have even suggested that it represents a serious domestic and international security threat (Paine and Cillufo, 1994; Williams, 1994). The argument is also made that a wave of transnational crime undermines policies and the functioning of an increasing number of market economies around the globe (Handelman, 1995; Shelley, 1994). As a consequence, the proposed remedies are often quite drastic and involve undercover operations, privacy-piercing approaches, and the participation of intelligence services in the fight against global crime (Andreas, 1997; Naylor, 1999; Passas and Blum, 1998; Passas and Groskin, 1995).
Yet, little attention and virtually no systematic research has been devoted to understanding the causes, structure, extent, and effects of serious cross-border misconduct (Passas, 1998). The risks it poses may be grossly exaggerated (Naylor, 1995; Lee, 1999). The draconian measures being contemplated and implemented in different countries, therefore, are essentially an exercise in shooting in the dark. Chances are good that the target will be missed and substantial "collateral damage" may be caused by ill-conceived policies in this "war" on crime. This risk is particularly high in countries in transition toward a market democracy. It would be much wiser, thus, to carefully study the problem before taking ineffective and possibly damaging actions.
This article seeks to make a contribution by concentrating on the causes of transnational economic crime. The main argument is that, contrary to conventional wisdom, neoliberalism and globalization contribute to processes leading to global anomie, dysnomie, and, ultimately, economic misconduct. They do so by activating the criminogenic potential of economic, political, legal, and cultural asymmetries, as well as by creating new such asymmetries (Passas, 1999). These asymmetries cause crime by furnishing opportunities for misconduct, by generating motives for actors to take advantage of such opportunities, and by weakening social controls. More specifically, means-ends disjunctions are systematically created, as neoliberal policies foster new needs and desires that are all too often left unfulfilled. Promises of more freedom, prosperity, and happiness for a larger number of people have turned out to be chimerical. Economic and power inequalities have widened within and across countries in the last two decades . The number of poor has reached unprecedented levels, while welfare programs and safety nets are reduced or abolished. Enormous populations have become more vulnerable to exploitation, criminal victimization, and recruitment in illicit enterprises or rebel and fundamentalist groups. Normative standards and control mechanisms are weak or completely absent exactly when they are needed the most.
This article begins with some basic conceptual clarifications and outlines the theoretical framework so far applied to the analysis of U.S. organizational and individual deviance. Then, the main features of globalization and neoliberalism are presented, followed by a contrast of promises made by proponents of neoliberal policies and their actual consequences. Attention then shifts to specific criminogenic effects of these outcomes and the case of Russia, which illustrates the different stages in the processes leading up to serious misconduct and anomie. The chief policy implication of this analysis is that the recently unleashed forces of neoliberalism need to be reined in and held in check, while government policies ought to better shield the least privileged from the adverse effects of globalization.
Some Conceptual Clarifications
Although there is no universally accepted definition of transnational crime, many commentators seem to think of it as a globalized form of the stereotypical "organized crime." This, however, leaves out corporate and governmental crimes, whose effects can be far more harmful than those of "professional" criminals and ethnic groups involved in the business of illegal goods and services. We therefore need a definition that is inclusive enough without becoming too relativistic and subjective. For our purposes, transnational crime refers to cross-border misconduct that entails avoidable and unnecessary harm to society, is serious enough to warrant state intervention, and is similar to other kinds of acts criminalized in the countries concerned or by international law. Crime will be viewed as transnational when the offenders or victims are located in or operate through more than one country (Passas, 1999).
Globalization is another term that is often used without clear definition. In the simplest sense, it refers to a growing interconnectedness and multilateral linkages across national borders. According to Keohane and Nye (2000: 104), globalism is a state of the world involving networks of interdependence at multicontinental distances. The linkages occur through flows and influences of capital and goods, information and ideas, and people and forces, as well as environmentally and biologically relevant substances (such as acid rain or pathogens).
Globalism has several dimensions, such as economic, cultural, environmental, or military, not all of which take place at the same time. So, whenever globalism increases and becomes thicker or more intense, we can speak of globalization. When globalism decreases, we can speak of de-globalization.
Finally, the term "criminogenic asymmetries" refers to structural discrepancies and inequalities in the realms of the economy, law, politics, and culture. Such asymmetries are produced in the course of interactions between unequal actors (individual or organizational) or systems with distinctive features. All asymmetries contain some criminogenic potential. Durkheim argued that crime cannot be eliminated, because we are and always will be different from each other. Even in a society of saints, minor deviations would be considered serious offenses. In modern societies, crimes are those behavioral differences (asymmetries) that have been outlawed by legislative bodies. There is always the opportunity for powerful actors to victimize less privileged ones (economic, political, and power asymmetries). This potential is not always materialized. Criminal opportunities are not necessarily taken advantage of. Mostly this is because actors do not always seek or wish to make use of illegal opportunities. They may not regard such action as appropriate (due to socialization, internalization of norms) or fear adverse consequences. The criminogenic potential is most likely to be activated when opportunities, motives, and weak controls are all present.
For example, a combination of legal/regulatory asymmetries with economic and political asymmetries has given rise to a huge illicit market for toxic waste disposal. Many Third World countries either did not regulate toxic waste or did so much less rigorously than did industrialized states. This provided an opportunity for maximum-profit-seeking companies to getrid of their hazardous waste in areas where rules were lax or nonexistent (Center for Investigative Reporting and Moyers, 1990; Critharis, 1990). Power and economic asymmetries between rich and poor countries have led waste recipients to allow this to go on because of their dependence on foreign investment, the need for cash to service external debt, or the desire to create jobs (Korten, 1995). Economic and knowledge asymmetries also shaped the motivation of local participants in this questionable trade. The decision to go along reflects an incomplete understanding of the extent or nature of the hazard, their desperate need for additional income, an effort to be competitive and attractive to foreign companies (race to the bottom), or corruption.
Anomie and Deviance
Both Durkheim (1983) and Merton (1968) have stressed how high rates of deviance should be expected when social expectations are out of balance with realistic opportunities to reach the desired goals. According to Durkheim, this means-ends discrepancy is caused by society's inability to regulate people's naturally limitless desires. This problem was particularly acute in the commercial and business sector, in which anomie was chronic during the industrial revolution, opening up new horizons and undermining society's ability to contain aspirations. A similar situation can be observed in contemporary societies, where electronic, information, and biological technologies constantly redefine what is possible and break new ground.
According to Merton, unrealistic hopes and expectations are not simply natural, but socially constructed and promoted. Structural problems are at the heart of the means-ends disjunction. The U.S. culture and the ideology of the American Dream encourage lofty expectations, while society fails to provide equal access to legal opportunities. Meanwhile, there is a cultural overemphasis on success goals at the expense of normative behavior (as further elaborated by Messner and Rosenfeld, 1994). Both of these factors make for deviance and anomie.
Without ignoring the differences between the two sociologists, it has been possible to use an elaborated version of their anomie theories to explain corporate crime in the context of capitalist economies (Passas, 1990). Regardless of whether people strive for "more" due to natural drives or because of cultural encouragement, the point is that market economies cannot perform without lofty aspirations, consumerism, emphasis on material/monetary goals, and competition. All this leads to the pursuit of constantly moving targets and systematic sources of frustration. A synthesis of anomie theory with reference group analysis made clear how means-ends discrepancies are socially generated and experienced by people in all social strata. It also showed how this theoretical framework is applicable to the analysis of crime without strain or problems (i.e., anomie theory is not a strain theory) and to "organized crime" even after discrimination or blockage of legitimate opportunities no longer affects minority groups (Passas, 1997).
In brief, the dynamic social process leading to structurally induced strain, anomie, and deviance without strain is as follows. Means-ends discrepancies are caused by a strong cultural emphasis on monetary or material success goals for all members of society, while a good number of them do not have a realistic chance to attain them. Socially distant comparative referents are constantly introduced and sustained through the school, family, politics, workplace, media, advertising, and even religion (Passas, 1994). Regardless of their social background and the social capital available to them, people are urged to desire more than they have. Success stories of going from rags to riches make the American Dream even more believable. As this cultural theme is internalized, competitive forces and consumerism foster normative referents on what is "normal" and appropriate. The widely internalized egalitarian discourse clashes in practice with widespread inequality (power and economic asymmetries). Consequently, those m embers who fail to meet such comparative and normative standards are likely to experience relative deprivation and frustration. This strain, combined with the culturally induced overemphasis on goals and the concomitant under-emphasis on the proper methods, makes for deviance of various types (see Merton's typology). A good part of the deviance is an individual search for a solution to these structural problems. If the deviant solution is successful (i.e., perpetrators are not caught or adequately punished), this adaptation may become normative for others in a similar social context. To the extent that this solution is available to them (demand for illicit goods or services, access to illegitimate opportunity structures), they may adopt this role model -- and may be expected by their significant others to follow this path -- even though the original source of strain has by now been eclipsed. Unless effective control measures are taken, this process continues in a vicious circle toward higher rates of deviance and widespread anomie (for a schematic representation of this process, see Figure 1 at the end of the article).
In the literature, anomie is often conceptually confused with its causes or effects. To keep its explanatory potential, this mistake should be avoided. Anomie is a withdrawal of allegiance from conventional norms and a weakening of these norms' guiding power on behavior. This is caused by structural contradictions and affects deviance in two ways. One is associated with strain, the other is not. The former is caused by relative deprivation, frustrations, and the almost obsessive focus on goals. This makes deviance thinkable, as conventional norms are regarded as nonbinding, at least temporarily. Rationalizations enable departures from otherwise accepted/internalized social rules, as actors convince themselves that in their particular circumstances an exception is acceptable (Aubert, 1968; Sykes and Matza, 1957). Through interactive processes, techniques of neutralization and rationalizations contribute to a context in which newly socialized actors may adopt normative referents and deviant behavior as a matter of course. If "this is the way business is done around here," people may engage in price fixing or misleading advertising without experiencing any prior frustration or problem.
Globalization and Neoliberalism
These structural problems have been most prominent in the USA. However, a very similar process is now being reproduced throughout the world through globalism and neoliberalism. Promises are made that are not fulfilled. People's expectations are exalted at a time when economic and power asymmetries increase and become less justifiable and intolerable in the eyes of the people affected. The logic of the market permeates popular thinking and introduces rationalizations, making the adoption of a criminal or unethical solution more acceptable. The horizontal lines in Figure 1, rather than representing controlling influences, at the global level point to the criminogenic impact of globalization and neoliberal policies.
Nowadays, globalism and neoliberalism seem to be indistinguishable empirically or even conceptually (Cox, 1993; Stewart and Berry, 1999). Nevertheless, I think it is useful to try to separate them analytically. As noted earlier, globalism refers to the degree of interconnectedness and the increase or decrease of linkages. By contrast, neoliberalism refers to an economic and political school of thought on the relations between the state on the one hand, and citizens and the world of trade and commerce on the other. Because it espouses minimal or no state interference in the market and promotes the lifting of barriers to trade and business transactions across regional and national borders, it certainly becomes a motor of globalization.
Globalization in the last two decades shows clear signs of deeper and thicker interconnections that affect many more people than ever before. The effects are now much faster, as shown by the financial crisis in Thailand in 1997. The world has shrunk and become "one place," with global communications and media, transnational corporations, supranational institutions, and integrated markets and financial systems that trade around the clock (McGrew, 1992; Sklair, 1995). The cultural landscape has changed under the influence of mass media. Through their ads, TV programs, movies, and music, they contribute to cultural globalism, target young children, and foster consumerism (e.g., "Image Is Everything," "Just Do It," or "Coke Is It"). Information technology is making for "distant encounters and instant connections" (Yergin and Stanislaw, 1998). Fresh normative and comparative ideals are thus promoted, legitimated, and presented as attainable. Scholars attribute the momentum of this process to the forces of capitalism (Wallerstein, 1983), technology (Rosenau, 1990), the presence of a hegemon (Gilpin, 1987), or a combination of them all (Giddens, 1990).
Neoliberalism, in particular, has made a major contribution to the dynamic and contradictory processes of globalization since the elections of Ronald Reagan, Margaret Thatcher, and Helmut Kohl. During the 1950s and 1960s, the dominant concerns revolved around distributive justice, neocolonialism, and dependency theory. These were displaced in the 1980s and into the 1990s by discourses of "free markets," individualism, and self-help (Woods, 1999). Policies of deregulation, privatization of state assets, and removal of tariffs implemented the doctrine that the state should get out of the way of free enterprise. Unemployment, inequality, and poverty were no longer explained by structural contradictions or constraints. The problems became individualized and blamed on corrupt administrations or on the poor themselves. The proposed medicine was more liberalization of the economy, free competition, privatization of inefficiently managed government agencies, abolition of capital controls, and permitting foreign capital to enter all markets.
The ideological underpinning of globalization, thus, has been the primacy of economic growth, which is thought to be benefiting the whole planet. Consistent with that prime directive, country after country has been persuaded (or forced) to promote "free trade" and consumerism, to reduce government regulation of business, and to adopt the same economic model regardless of local specificities and differences between industrialized and developing countries (Bello, 1999; Mander, 1996).
More specifically, shifts in the North, the East, and the South have been quite remarkable. In the North, the welfare state that used to care for citizens "from cradle to grave" has been replaced by a "pay as you go" social service system. Even public utilities have been privatized and have begun to charge "economic prices," as former subsidization systems were abolished. Further, "industrial interventionism and labour protection have given way to laissez-faire; and tax systems whose major purpose was to correct inequalities have been transformed into systems mainly intended to promote incentives and economic efficiency" (Stewart and Berry, 1999: 151).
In developing countries, similar shifts took place as a result of hegemonic influences from the North. Western-educated Third World "technocrats" returned to their home countries eager to introduce neoliberal policies (Burbach et al., 1997: 86; Newsweek, June 15, 1992). As the bandwagon of liberalization took off, few countries wished to be left out. As a World Bank official warned, "lagging countries risk being left farther behind....For economies that remain inward-looking, the risk of being marginalized is greater than ever" (cited in Klak, 1998: 21).
Yet, the shifts have not always been voluntary. A host of measures and conditions consistent with the neoliberal agenda were imposed on countries through international institutions, such as the International Monetary Fund (IMF), the World Bank, the OECD, the European Union, the G7, etc. Countries drowning in external debt sought additional loans to pay off their older ones -- chiefly to banks from the industrialized world. Billions of dollars were made available to them, but only if they introduced Structural Adjustment Programs (SAPs). Despite important differences among the various economies, SAPs shared the same basic elements: long-term "structural" reforms to deregulate the economy, liberalization of trade, removal of restrictions on foreign investment, promotion of an export orientation of the economy, wage reductions and controls, privatization of state enterprises, and short-term stabilization measures such as cutbacks in government spending, high interest rates, and currency devaluation (Bello, 1996 ; 1999).
Changes along these lines also took place in the East, where the switch from state-managed economies toward "free market" and parliamentary democracy has been quite drastic and swift (Glinkina, 1994; Woods, 1999). The problem is that the introduction of global neoliberalism has brought about enormous economic and political asymmetries, as its promises and theoretical expectations remain unfulfilled.
The Promises of Global Neoliberalism
The supporters of global neoliberalism make a series of claims. For instance, the world is shrinking following greater connectivity (IBM claims to offer "solutions for a smaller planet"). The distinction between core and periphery states is presumed to be getting fuzzier and irrelevant, as there are only winners from now on. Investment, trade, and development opportunities are more widely distributed around the world. There is a marked convergence into one world economy, in which everyone can find a market niche. Media and cultural influences are more widespread and multilateral, as foods, music, and art are imported to the North and integrated into local cultures. Finally, people are more integrated thanks to telecommunication technologies and immigration (Klak, 1998).
To [neoliberal] economists, all these trends are positive, even if short-term hardship is deemed necessary for some parts of the population. Global welfare is expected to be enhanced, as the forces of free competition within and between countries will encourage more efficient resource allocation and bring about higher productivity (Oman, 1999). A more open, trade-creating world should, therefore, benefit everyone, if unevenly. Trickle-down effects of wealth creation would ensure that virtually everyone will participate in this welcome trend (Korten, 1996).
The objective of SAPs was to render developing economies more efficient, drive up growth rates, and provide foreign exchange that could be used to repay debt. Higher growth rates are empirically associated with comparatively more equal income distribution (Alesina and Rodrik, 1994). Hence, neoliberal policies would bring about not only more economic growth, productivity, a better division of labor (multistate production and wider participation), lower unemployment, more wealth and prosperity, but also more democracy, less poverty, and fewer inequalities. Unfortunately, in most countries, these virtuous circles did not occur.
The Consequences of Global Neoliberalism
Throughout the world, the expectations raised by neoliberal theorists have not materialized despite the extensive application of their policy recommendations. Instead, most economies "fell into a hole" of low investment, decreased social spending and consumption, low output, decline and stagnation. Both the World Bank and the IMF retreated from SAPs and acknowledged their failure (Bello, 1999; Katona, 1999; Multinational Monitor, June 2000; Watkins, 1997).
In the North, GDP growth was lower in the 1980 to 1990 period than in the 1950s and 1960s. We also witness a higher volatility in growth (e.g., booms and busts). Lost in all the talk about huge technological advances ushering in the computer and Internet era is the fact that productivity growth now is half that of levels in the 1950s and 1960s. Unemployment in OECD (Organization for Economic Cooperation and Development) countries has risen from eight million in 1970 to 35 million in 1994. In the midst of U.S. prosperity and economic expansion, inequalities increased. The number of people living under the officially defined poverty level grew from 11.4% of the population in 1978 to 13.5% in 1990. Almost one in four new babies in the U.S. are born into poverty, while the top one percent of Americans saw their real income shoot up by 50% (Levy, 1998; Wilterdink, 1995). Also noteworthy is that U.S. and Western European international trade relative to GDP was greater a century ago than in recent years (Hirst and Thompson, 1996).
Neoliberal dreams proved to be even more chimerical in the South. Role models, like South Korea, Malaysia, and Indonesia plunged into crises in the 1990s. Mexico and Brazil, which faced their own scary periods, experienced growth of three percent in the last two decades, whereas that rate was six percent during the dirigiste period of 1950 to 1980. Wage gaps widened. Even in Costa Rica and Chile, models of success in Latin America, the results have been an unmitigated disaster for the lower social classes. The number of Costa Ricans below the poverty line rose from 18.6% in 1987 to 24.4% in 1991, while 42% of all Chileans are also living in poverty (Burbach et al., 1997: 86). Half of the investment flows to developing countries went to just three countries (China, Mexico, and Argentina). In addition, some investments had negative local effects. For instance, as diverse agriculture was converted into monocultures or to export-oriented flower plantations, self-sufficiency was undermined (Clinard, 1990; Klak, 1 998).
Moreover, the core-periphery distinction is as relevant as ever. Its real meaning relates to power, authority, and the accumulation of wealth, where the gaps (asymmetries) are increasing. Although production (of certain items) is more dispersed, the concentration of power, control, and benefits has become more pronounced. In 1991, 81% of the world stock of direct foreign investment was in the core triad of the USA, the European Union, and Japan -- up from 69% in 1967. The appearance of integrated markets also obscures the fact that 80% of all world trade is within the core triad, in which resides less than 20% of the planet's population (Hirst and Thompson, 1996; Klak, 1998).
In Latin America, debt jumped from $230 billion in 1980 to $600 billion in 1997. Capital had been fleeing those countries up to the early 1990s, when net inflows were the result of casino capital -- seeking short-term gains and likely to abandon those countries at the first hint of trouble. Consequently, new debts were created with a new round of borrowing (Robinson, 1998-1999). An important reason why developing countries cannot pay off their debt is that trade protectionism in the North has kept them from penetrating those markets. Trade liberalization has been inconsistent in that rich countries demand more open markets abroad, while continuing to subsidize their own economic sectors, such as agriculture (Andreas, 1999; UNDP, 2000; Watkins, 1997). Compounding these problems, aid to poor countries has been cut back. Whatever assistance is offered comes with strings attached, including the reduction of state intervention, which could have softened the effects for the most vulnerable (Watkins, 1997; Woods, 1 999). These policies further undercut food security, cause poverty, and increase economic and power asymmetries. For instance, the cost of living in the Caribbean and the U.S. is quite comparable. In 1997, however, per capita income in Trinidad and Tobago, the richest Caribbean state, was less than half that of Mississippi, the poorest U.S. state. The gap between skilled and unskilled workers widened even more: Haitian workers made clothing with Disney logos for less than 60 cents per hour, while Disney's CEO made $9,700 per hour (Klak, 1998).
The claim of multilateral and even cultural influences also masks tremendous asymmetries. Even though we listen to reggae in the North, 95% of TV programs in St. Lucia come from the U.S. The most widely read newspaper in the Caribbean is the Miami Herald. Consequently, U.S. affluence and opportunity, often romanticized, is especially well-known, deeply ingrained, and alluring to the Caribbean...[where] people are prone to set their living standard goals in accordance with what the U.S. media ascribe to the United States. And the imbalance in media flows is increasing with the Caribbean's economic crisis and neoliberalism, as local media have been slashed (Klak, 1998: 11).
As dreams of consumption are disseminated, 86% of total private consumption expenditures is accounted for by 20% of the world's people in industrialized countries (UNDP, 1998). For the people who live outside the consumption geographical area, big banks offer credit to only 10% of the people in developing countries, whereas ads for credit cards and consumer items are omnipresent (Barnet and Cavanagh, 1994). Well over one billion people are deprived of basic consumption needs. For hundreds of millions, basic sanitation, clean water, adequate housing, and health services are unattainable luxuries. Two billion people live on less than two dollars a day and 1.3 billion on less than one dollar a day (ICFTU, 2000). Struggling to survive, some decide to sell their body parts to make ends meet, which is the ultimate symbol of commodification (ScheperHughes, 2000).
A negative effect of the Internet is that it alters the relationship between our place of residence and our cultural preferences, experiences, and identities. A spreading global virtual reality disconnects locality from culture, weakens the bonds to particular communities, and estranges people from each other (Minda, 2000). Ladakh, a Himalayan province that prospered for a millennium despite harsh weather conditions, illustrates how (especially cultural) globalization devastated local communities (Norberg-Hodge, 1996). In 1962, isolated Ladakh was linked to the rest of India by an army-built road. The modernization that began in 1975 took about a decade to change the pride Ladakhis felt until then into a collective inferiority complex. Tourism and the media conveyed a picture of wealth, technology, power, and work that was alien and irresistible to them. Village life by comparison began to appear "primitive, silly, and inefficient" (Ibid.: 35). Ladakhis felt ashamed of their culture and strove for consumer items that symbolize modern life, such as sunglasses and Walkinans. As Western educational standards penetrated Ladakh, the intergenerational learning experience that helped them provide for themselves in their rough terrain gave way to schools that used texts imitating Indian and British models that were completely irrelevant to their lives (e.g., figuring out the angle of the Tower of Pisa and learning how to keep a London-like bedroom tidy). There used to be no such thing as a "paying job"; there was no money economy. Gradually, however, unemployment -- previously nonexistent -- became a serious problem, because naturally available resources were abandoned, cheap imports made local farming redundant, and people flocked to the cities to compete for scarce jobs. Radios and TVs chased away the traditions of singing together and group story telling. The points of reference ceased to be real people living nearby, but geographically and socially remote ideals. Consumerism bred new "needs," which could hardly be materialized. Family and other bonds disintegrated and divisions emerged between old and young, Buddhists and Muslims. The result was unprecedented violence, community breakdown, and anomie.
Criminogenic Effects: Systemic Strains and Global Anomie
What makes the ideology of the American Dream unique is a focus on money and material goods, a strong emphasis on "winning" (often, by all means), and success for everyone in a society where many opportunities for material advancement are available and plenty of "rags to riches" stories lend legitimacy and credibility to the egalitarian discourse. Legal opportunities, however, for achieving the lofty goals are inaccessible to most Americans. In such a consumption-driven culture, which highly values competition and individualism, the means-ends disjunction has entailed a significant criminogenic risk, much greater than in the rest of the world. Crime has been the flip side of economic growth, innovation, and better living standards for certain segments of the population. What sheltered other countries from this negative potential were things absent or minimized in the USA, such as rigid social stratification, low rates of social mobility, less materialism and time spent before TV boxes, safety nets for the underprivileged, more emphasis on other priorities (e.g., solidarity), etc.
This made it possible to explain the higher crime rates in the U.S. compared to other developed or developing countries. These protective factors, however, are now being gradually lost. Disjunctions between socially induced goals and legal means are few in societies that do not encourage high social mobility. In such societies, people may not feel that they are lacking anything, even when they are "objectively" deprived. Economic or other asymmetries are unknown or not experienced and perceived as intolerable. Global neoliberalism breaks down societal barriers and encourages new needs, desires, and fashions. It promotes the adoption of non-membership reference groups for comparisons that can be unfavorable and upsetting. New normative reference groups define what is "cool" to do. People's ideals in the South and the East may not be about getting from "a log cabin to the White House." However, they are being systematically driven to abandon old ways and values in order to consume. They do not necessarily think that they can be "like Mike," but they do fancy those pricey athletic shoes. So, fresh normative and comparative models create new "needs," together with the expectation that the fulfillment of such needs is vital and achievable.
Yet, as needs and normative models are "harmonized," people become conscious of economic and power asymmetries, and directly experience their impact. Globalization and neoliberalism heightened this awareness, further widened the asymmetries, and fostered the interpretation of them as unnecessary and changeable. In the end, most people realize that the attainment of their lofty goals and lifestyles is beyond reach, if they are to use legitimate means. The success in spreading neoliberalism has brought about a series of failures: more poverty, bigger economic asymmetries, ecosystem deterioration, slower and unsustainable growth patterns. At the time that societies most needed the shield of the state to cushion these effects, welfare programs, safety nets, and other assistance to the poor (individuals, companies, and states alike) forcibly declined or disappeared. Thus, global neoliberalism systematically causes relative deprivation as well as absolute immiseration of masses of people. In effect, it has generated new sources of criminogenesis and removed existing antidotes to it.
All this provides multiple motivations for criminality, as many would turn left and right for solutions and illicit opportunity structures become more international and accessible. At the same time, many weak states lose their autonomy, come to depend more on international organizations and transnational capital, and are unable to cope with emerging crime threats from criminal enterprises and powerful corporations. So, globalism and neoliberalism replace the "egalitarian discourse" of the American Dream in the scheme represented in Figure 1 in a process occurring in the industrialized world, developing countries, and those in transition from Communism to market democracies. Nowhere are these results more clearly visible than in the former USSR.
The Case of Russia
No one argues that there was no appetite for consumer goods in the years of the USSR or that such goods were widely available. Crime, corruption, illegal markets, and even underground factories could be found behind the official facade of the command system before glasnost and perestroika, although black marketers were not numerous and lived modestly. The government turned a blind eye to these activities, because they served as a safety valve in an inefficient system (Gleason, 1990; Handelman, 1995; Naylor, 1999b). Discontent, enormous structural problems, and an inability to deal with them characterized the pre-transition years. This is particularly true for the 1960s, when Khrushchev pledged that the USSR would overtake the U.S. in the production of industrial goods by the 1980s. Yet, as inefficiencies precluded such progress, demands for more consumer items "from an increasingly educated, by now self-assured, population, started to put pressure on government...as a loyal expression of the citizens' request for the gradual delivery of promised well-being" (Castells. 2000: 25).
In the 1990s, however, the rates of fraud, prostitution, drug trafficking and abuse, alcoholism, smuggling, white-collar crime, violence, and corruption skyrocketed (Castells, 2000; Handelman, 1995; Holmes, 1997; Lee, 1994; Shelley, 1994). To be sure, Russia is unique in the degree of chaos and disintegration that accompanied the transition to a market economy and the implementation of neoliberal reforms. Few countries have experienced the speed and intensity of privatization, deregulation, and the lack of political leadership and administrative skills we witness in Russia. Indeed, it is the closest we can come to a social state of anomie, without a total collapse and anarchy. This does not mean that Russia is atypical. Very similar, albeit less intense, processes have occurred throughout the world (Lee, 1999; Mander and Goldsmith, 1996; van Duyne et al., 2000). Nevertheless, precisely because it is such an extreme case, it illustrates the theoretical points made here and the process toward anomie and economc crime.
Enter Neoliberalism
In the 1985 to 1989 period, reforms took place while the Communist Party was still in control. The Law on Cooperatives (1986) and the Law on Individual Labor Activity (1987) paved the way for further reforms, such as legalization of small businesses in 1989. Between 1990 and 1991, the USSR Supreme Soviet, with Yeltsin as chairman, introduced laws that made state and private enterprises equal, allowed state companies relative independence from government managers, abolished mostrestrictions on property bought by citizens, promoted privatization, and allowed foreign companies to operate in Russia. Such reforms did not take place at the same pace throughout the USSR. This set Russia apart from the Union and Yeltsin from Gorbachev. Legal asymmetries made the task of law enforcers impossible, as they did not know which laws to prioritize and apply (Afanasyef, 1994). Up to the 1991 coup and the collapse of the USSR, reforms were cautious and gradual, and had not challenged the core of the command economy system. F ollowing the failed coup and under Yeltsin, however, this changed dramatically. Demagogy and erroneous judgments on the feasibility of a swift transition to a market democracy compounded the problem. The Russian government was warned of the dire consequences of a speedy transition to a market economy without previous establishment of the necessary institutions and legal infrastructure. The chairman of an international advisory committee, which repeatedly issued warnings in 1992, was told that "forces in the Kremlin" favored a less "regulatory approach that would provide greater freedom of manoeuvre. Gaidar, supported by the IMF, believed firmly in the intrinsic capacity of market forces to remove obstacles by themselves, and people could use their vouchers to acquire shares" (Castells, 2000:188). Prices were liberalized, imports and exports became free, domestic trade restrictions were abolished, government intervention was minimized, and public property was massively privatized. By June 1994, officials were self-congratulatory over the fact that 70% of state assets had passed into private hands (Kuznetsova, 1994).
New Normative and Comparative Referents
The reforms initiated by Andropov and Gorbachev (perestroika and glasnost) allowed some freedom of speech and openness that let globalization and media influences into the USSR. The post-1991 changes, however, offered new hope out of the severe problems people were facing. Russian leaders fostered heightened aspirations by declaring that the country would soon be modernized and join the "civilized world." Authorities in the former Soviet republics made the same promise, arguing that '"since we gotrid of the Russians,' all obstacles to prosperity have been removed and Western standards are within reach" (Burbach et al., 1997: 118). There were forceful and impressive presentations of consumerist lifestyles as "desirable," "modern," and feasible. Distant comparative and normative referents were thus promoted by the media and advertising. Indeed, the yearning for Western lifestyles and consumption items made the initial acceptance of neoliberalism by the population much easier (Ibid.). Neoliberalism strengthened that desire and made consumerist dreams appear realistic. Even young Russians now would like to be like Mike and wear the same type of shoes or eat the same breakfast. As Glinkina (1994: 385) put it, an important factor contributing to the criminalization of the economy has been "a drastic stratification of the population's standard of living with a simultaneous loss, in a considerable part (especially among the youth), of socially important goals --replacing them with consumption ideals...."
It must be noted that the normative shift was far more radical in the former USSR and Eastern Europe than it was in Third World countries. The transition from socialism to capitalism by overzealous authorities espousing the new dogma of neoliberalism has had its own direct anomic effects, as will be seen below.
The Consequence: Means-Ends Discrepancies
The worldwide consequences of neoliberal policies were replicated in Russia. However, the effects have been far more disastrous than elsewhere: lower productivity, high unemployment, much steeper inequalities, increased levels of absolute poverty, disappearance of familiar safety nets, and administrations paralyzed by ineptness and corruption. The ensuing means-ends discrepancies are far more than a theoretical construct. They are painfully experienced by large numbers of people who realize that they simply cannot attain their goals. Within one year, inflation wiped outmost people's life savings, while the buying power of most wages dropped to the level of the 1950s. In the winter of 1993, funds were often insufficient to heat residential buildings (Burbach et al., 1997; Handelman, 1993).
As a new bourgeoisie emerged from the ashes of the Communist regime, one-third of the population became impoverished. The gap between the rich and the poor opened up suddenly and grew out of proportion. Official data indicate that in 1994 the difference between them was elevenfold. Researchers argue that the difference between the top 10% and the bottom 10% is 28-fold (Kuznetsova, 1994). Even the chair of the Privatization Commission admitted that the process created "pauper-proprietors" who "cannot survive without state protection" (cited in Burbach et al., 1997: 120).
Relative and Absolute Deprivation
The rising expectations of the 1960s led to disenchantment with Communism and paved the way for radical social change. The abandonment of the Soviet conservative model and very rapid implementation of neoliberal policies fueled hopes that a much better future was within reach. Russians rejected rigid stratification and strove for a socially mobile ideal. As has been noted, [the middle classes] believed that capitalism could offer even more. Thus, the modernization that had been promised by the neoliberals was perceived by the majority of the population as the modernization of consumption.... The Western model of consumption has finally triumphed, at least in the main cities. But for the majority of the people, the price is that even the former Soviet way of life has become an unattainable dream (Burbach et al., 1997: 124).
The aspiring yuppies have ended up as "dumpies," while a growing polarization makes them see a few of their compatriots enjoy luxuries attained by looting the remnants of the former USSR.
Thus, the post-Soviet Russian dream turned out to be a nasty nightmare (Handelman, 1995). As happened in many other countries, austerity, belt tightening, and lower (in some cases, no) salaries were imposed as consumerism took hold. The impact of these experiences on personal feelings is much more widespread, intense, and unpleasant due to the higher expectations. Even people who are not objectively deprived now feel relatively deprived. Comparisons between their present and past situations are unfavorable: "Formerly privileged sections of the Russian population, such as teachers, doctors, miners, and workers in the oil and gas industry, went on strike, for they could no longer survive on 50 to 70 dollars per month salaries" (Burbach et al., 1997: 125-126).
East-West political and administrative asymmetries, economic asymmetries, and relative deprivation in the aftermath of the collapse of the USSR and disillusionment with Western policies and capitalism have been clearly criminogenic (Handelman, 1994; Shelley, 1994). Motives for various types of crime became abundant, illegal opportunity structures multiplied, and control systems have been seriously damaged and undermined. The Mertonian category of "conformity" has almost become a rarity, as crime rates increased sharply. Even worse is the problem of economic crime. Recorded economic crimes rose almost 23% during the first seven months of 2000, compared with the same period in 1999 (Radio Free Europe/Radio Liberty, August 17, 2000). Strains and discontent have translated into a range of predatory misconduct, corruption, political violence, a variety of illegal markets, and expressive misconduct.
Search for Solutions and Anomie
In this context, many can be expected to "innovate," to employ illegal methods for survival or the satisfaction of their basic and newly acquired needs. Methods range from petty property crimes and prostitution to criminal enterprises and white-collar crime, depending on the social position of the offender. An electronics engineer, for example, could not live on his three dollars per month and moonlighted as a taxi driver. When his taxi broke down, he turned to selling poppy straw (OGD, 1996). Unpaid and depressed professionals with access to more valuable commodities, such as nuclear material, pose an even more serious threat (Lee, 1999). Consumerist teasing increased demand for goods made unavailable (e.g., cars or electronics) by the economic collapse, fueling smuggling operations, black market networks, and associated illegal enterprises. Shortages of other desired goods are artificially created by quickly adapting entrepreneurs.
Similar conditions outside Russia explain the illegal car trade between Eastern and Western Europe (van Duyne et al., 2000) and the illegal trade in various commodities between China and Hong Kong before unification (Vagg, 1992). In Russia, many took advantage of such supply-demand asymmetries, including the vory v zakonye (commonly described as "thieves in law"), who had been the dominant type of professional offenders in the USSR. Structural changes and globalization, however, brought about more competition from ethnic groups (Armenians, Azeris, Chechens, Georgians, etc.) in drugs and arms trafficking, as well as from loose and ad hoc associations of criminals in certain locations or industries. Unsettling reports assert a symbiotic relationship between criminal groups and active or retired intelligence officials. Deteriorating economic conditions have facilitated recruitment for employees in growing illegal markets. Criminal enterprises, for instance, have "...invested heavily in the opium business, financing much of the new cultivation by hiring peasants and even entire villages to plant and protect the poppy crops" (Lee, 1994: 401).
Another source of criminal opportunities sprang from the disintegration of institutions and the disarray in law enforcement. Legitimate businesses are exposed to blackmail and other criminal victimization, but the authorities are unable to assist them. Consequently, many domestic and foreign companies deal with criminal groups and seek their protection, rather than rely on the government (Lee, 1994). Not surprisingly, the majority of Russian experts consider the strengthening of criminal groups to be a "very significant" social consequence of the market reforms introduced in 1992 (Afanasyef, 1994).
Other illicit opportunities were furnished by the privatization process, such as selling state assets at extremely low prices or driving down the prices of privatized companies so as to cheaply purchase vouchers owned by individuals desperate to make ends meet. Privatization in countries with an existing bourgeoisie and experienced managers and entrepreneurs facilitated certain corporate crimes and abuses of power by respected professionals. In Russia, the mix of offenders was different: former company directors, the nomenklatura, professional criminals, and new entrepreneurs with a black market background (Glinkina, 1994; Kuznetsova, 1994; Shelley, 1994). The attempt of former Communist officials to dominate this field did not prove lasting. Many were not competent to run private businesses and had to sell them or lose control. The main beneficiaries seem to be former black marketers and outsiders to the old order (Naylor, 1999b). The abuse of privatization has had an anomic effect as the impunity of offenders became widely known, to the point that Russians began to refer to privatization (privatizatsiya) as prikhvatizatsiya, which means "grabbing" (Handelman, 1995: 104).
Crime and corruption in the midst of privatization fervor are not unique to Russia. (On other previously Communist states, see Popescu-Birlan, 1994; on Latin America, see Saba and Manzetti, 1996-1997.) As a former World Bank official put it, "everything we did from 1983 onward was based upon our new sense of mission to have the south privatized or die; towards this end we ignominiously created economic bedlam in Latin America and Africa" (cited in Katona, 1999). Another similarity with other parts of the world is the degree of authoritarianism that accompanied neoliberal policies. While stimulating rapid accumulation of private capital, the role of the state is reduced to implementing financial austerity. When people started to oppose such measures, "Yeltsin resorted, with Western support, to establishing a semi-authoritarian regime. Making Russian 'reformers' invincible to political and legal challenges inside the country contributed to further criminalization of the Russian State, which acquired an oligarchic character" (Beare, 2000:6). As similar processes occurred around the world, from Pinochet's Chile to Suharto's Indonesia, one wonders if such reforms would have been possible in a democracy.
Legal organizations also "innovate" by cutting corners and breaking the law due to the environment created by unsystematic legal reforms. Unable to navigate a sea of legal gaps and inconsistencies, "...most managers of private as well as state-owned enterprises cannot run their businesses without committing crimes" (Afanasyef, 1994: 437). Many companies cannot handle the competitive challenges generated by globalism and require state protection. The subsidization of privatized companies, however, introduces further regulatory and price asymmetries that foster the smuggling of goods across newly created borders within the former USSR (see below on nonferrous materials). Enterprises that do not enjoy state intervention are at a disadvantage and may be forced into bankruptcy or crime as a last resort. This is analogous to the situation in all countries that abolish trade barriers, let transnational corporations in, and eliminate preferential treatment for domestic industries.
High-level corruption and banking crimes have become quite common, as the networks of mobsters, financiers, businessmen, and high-level officials extend beyond Eurasia (Beare, 2000). The ongoing investigations into billions of dollars (possibly IMF-provided funds) laundered through the Bank of New York have expanded to include British, Swiss, and Italian entities and actors.
Moreover, pyramid schemes and other frauds have devastated gullible investors, as is the case with other post-Communist countries. Independent Oil, Lenin Trade and Financial Corporation, Aldzher (a security corporation), and other companies defrauded more than a million depositors and investors. Just as the Lincoln Savings and Loan frauds were committed in midst of obsessive deregulation in the U.S. against "the weak, the meek, and the old," Russian pensioners have been the main fraud victims (Glinkina, 1994).
Economic asymmetries among countries produce another set of criminal opportunities, as many become strongly motivated to flee the problem and search for a better future in the West, where the "goodies" are available. However, neoliberalism has promoted the free movement of everything but labor. Quotas and restrictions in promised lands generate demand for illegal services such as the smuggling of humans (Chin, 1999). This leads to opportunities for criminal exploitation, corruption, child/cheap labor, slavery, and forced prostitution.
Women, who are increasingly breadwinners but make up two-thirds of the newly unemployed in Russia, are even more vulnerable in this respect. Economic desperation drives many of them to prostitution or high risk taking. Lack of opportunity makes Russians and East Europeans softer targets for human traffickers. They are more likely to be lured to the West with promises of well-paying, respectable jobs only to end up blackmailed, beaten up, and forced into prostitution (Bruinsma, 1999; Shelley, 1994). The same problems faced by Thai, Mexican, and other women in the U.S. have led to a public hearing before the House Subcommittee on International Operations and Human Rights (September 14, 1999).
Relative deprivation and experience of injustice have a revolutionary potential too. International communications convey the message that injustice and inequality are avoidable. Events in one corner of the earth affect feelings and encourage people elsewhere to rebel against aggression. This may inspire change and foster rebellion. Just as the ideals of the French Revolution led to rebellions in the Balkans against the Ottoman rule (Hovannisian, 1994), the independence of the Baltic states and the U.N. response to Iraq's invasion of Kuwait inspired the East Timorese to fight against the Indonesian autocratic rule (Dunn, 1994). The uprising of Zapatistas in Mexico was deliberately started on January 1, 1994, the day NAFTA went into effect, "as a highly symbolic way to protest neoliberalism and globalisation in Mexico and Latin America" (Robinson, 1998-1999: 123-124).
Repressed nationalism, globalism, and bad times have jointly contributed to several armed conflicts and rebellions in the former USSR (the Caucasus, Moldova, Crimea, Tajikistan, and Chechnya). Rebellion and illegal markets become interconnected, as armed conflicts necessitate training, weapons, intelligence, and financing. The cases of Chechnya, Tajikistan, Afghanistan, and Colombia show how political revolts are associated with corruption, money laundering, the traffic in arms, drugs, and even nuclear material and other crimes that go unpunished (Kuznetsova, 1994: 445; Lee, 1999; Naylor, 1999b; OGD, 1996). Chechnya, which survives thanks to donations from criminal organizations based in other parts of Russia, has become such a paradise for these activities that some depict the war there as "a crusade against a 'mafia republic,'" while others think of it as "a conflict between opposing criminal elites for the control of oil and the financial resources held by the government in Grozny" (Politi, 1998: 44).
Finally, "retreatism" is the only option left to those lacking access to illegal opportunities or who are unwilling to assume the associated risks of violence and arrest. Hence, expressive crimes could be expected. More important, the rates of alcohol and drug abuse (further facilitated by the decriminalization of drug use in Russia in 1991) increased geometrically, especially in the cities, and fueled the demand for things provided in illegal markets (Lee, 1994; OGD, 1996).
Anomie
The transition from a command to a market economy practically legalized large parts of the black market and made legal business dependent on criminals' protection. The dismantling of borders and increased contact among previously isolated ethnic groups contributed to the formation of new, wider networks of illegality (Politi, 1998). The result was that one could hardly tell criminals from businessmen, particularly when some outlaw groups act on instructions from government officials or the police (Handelman, 1993). Given official efforts to ensure that the transition to a market economy would occur before substantial opposition could build and that the changes would be irreversible, too many shady actors were allowed to take advantage of this official shield (Glinkina, 1994; Naylor, 1999b). In this light, common views on government-criminal interfaces and symbiosis are plausible, although difficult to prove. Surveys in 1994 showed that the concern of Russians over organized crime was second only to their fears of triple-digit inflation (Afanasyef, 1994). At the perceptual level, therefore, this interface is real and has real consequences: demoralization and anomie.
The corrupted process of privatization has generated widespread rationalizations, such as, "it is OK to steal from the state" or "everyone is doing the same thing." Taking an example pointing to international security risks, Lee (1999: 21) has noted that, "perhaps the most serious problem is the growth of a privatization mentality within the nuclear complex. Economic reform has meant a license to steal. This has resulted in broad systemic corruption and a variety of insider threats and conspiracies."
An additional sign of anomie is what has been described as a "culture of urgency" among young killers:
For them there is no hope in society, and everything, particularly politics and politicians, is rotten. Life itself has no meaning, and their life has no future.... So, only the moment counts, immediate consumption, good clothing, good life, on the run, together with the satisfaction of inducing fear, of feeling powerful with their guns (Castells, 2000: 210).
Only effective social controls can halt the process toward further deviance and a higher degree of anomie (deviance without strain). Unfortunately, in Russia and elsewhere, a decreased level of autonomy for certain states, the increased power of international organizations and transnational corporations, and dysnomie add to the fuel.
Dependence, Deregulation, and the Race to the Bottom
"Just between you and me, shouldn't the World Bank be encouraging more migration of the dirty industries to the LDCs (lesser developed countries)?" "I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.... I've always thought that underpopulated countries in Africa are vastly under-polluted; their air quality is vastly inefficiently low compared to Los Angeles or Mexico City" (1991 memo attributed to World Bank official Lawrence Summers, who later became U.S. Secretary of Treasury; it is widely believed that he did not write it, even though he has accepted responsibility for it. At any rate, this illustrates the neoliberal mindset).
The loss of autonomy and reduced sovereignty of the state relative to capital referred to earlier (Korten, 1996; Watkins, 1997) is particularly acute in the former Communist countries. Speculative capital will quickly flee each country at the first sign trouble or wavering over neoliberal reforms. External debt grew in all former Communist countries, but especially in Russia, which bears the marks of Africa-like dependent capitalism and "colonial subjugation. The country exports fewer and fewer industrial products and more and more raw materials. Meanwhile, it imports low-quality mass consumption goods, obsolete and hence cheap technology, luxury items and radioactive waste" (Burbach et al., 1997: 120-121). An instance of the direct and blatant interference of foreign governments and transnational corporations in domestic matters was when Chase Manhattan urged the Mexican government to crush the Zapatista rebellion to calm down U.S. investors (Silverstein and Cockburn, 1995; see also Clinard, 1990).
Ironically, the higher degree of dependency in the South and East has lowered the accountability of politicians and corporations. They can now blame globalization for the loss of jobs and lower wages, and prescribe more "efficiency," deregulation, short-term austerity, and declining levels of public spending so as to keep capital in place or attract more. Thus, economic and political leaders appear to be protectors of the public interest and a stabilizing force, while they dismantle existing safety nets (economic neoliberalism has also undermined political liberalism; Klak, 1998).
The Russian government's aversion to regulation (Glinkina, 1994) is observable in other countries, where deregulation turned into competitive deregulation and a race to the bottom. Even in the U.S., the savings and loan disaster and the asymmetric regulation of hazardous wastes demonstrate how criminogenic this process has been. This made it possible to dump legally in Pennsylvania what was prohibited in New Jersey, in what has been termed "crimes without law violations" (Passas, 1999). Such crimes are most likely in the global context given the overwhelming influence of TNCs over national laws and macroeconomic policies. This has prompted some to speak of "rationalized corporate colonialism" (Mander, 1996). Such asymmetries of power make for legal norms that allow overseas that which is, for good reason, criminalized in the base country (e.g., toxic waste dumping, testing drugs on humans, bribery, tax evasion, as well as the patenting of life forms by biotechnology companies and other outrageous practices) (see King and Stabinsky, 1998-1999; Shiva, 1997). The legal asymmetries and uneven power of transnational corporations that create or perpetuate these and other asymmetries give rise to crimes without law violations. Thus, entire countries become vulnerable to victimization by TNCs, a significant problem that is often neglected in conventional discussions of transnational crime. The volatile combination of low wages, bad working conditions, tax breaks only for the rich/corporations, lower environmental standards, deregulation, and less corporate and political accountability with the government relegated to the protection of the international free trade system has predictably made for crises (e.g., Korea, Malaysia, Indonesia, Mexico, and Brazil). It also makes for dysnomie.
Dysnomie and Further (Global) Anomie
Dysnomie literally means "difficulty to govern" and obtains when the following three conditions are present: a lack of a global norm-making mechanism, inconsistent enforcement of existing international rules, and the existence of a regulatory patchwork of diverse and conflicting legal traditions and practices. Russia is in this respect a microcosm that reflects what is happening in the entire world.
Since reforms took place at an uneven pace in each Soviet Republic, an asymmetry grew wider following the collapse of the USSR. In addition, this collapse suddenly created thousands of miles of new borders that had to be policed, just as state resources were diminished. This made for porous borders that offered no resistance to smugglers. This is how Estonia became the largest exporter of nonferrous materials, even though it does not produce any (Glinkina, 1994). Extensive legal changes accelerated the transition to a market economy, but they were marked by inconsistencies and lacked the necessary legal and institutional infrastructure (Handelman, 1995). For example, the law against private entrepreneurship and commercial mediations was repealed only on December 5, 1991. The law against black market transactions, which defined them as "the buying up and reselling of goods or other items for profit-making," was first amended in February 1990 to increase penalties for certain offenses, was then officially rein terpreted to refer only to trade in commodities sold at state-fixed prices (October 1990), and was finally repealed in February 1991 (Afanasyef, 1994: 429). Lack of resources made the problem worse, as underpaid, ill-equipped, and outgunned police could not be expected to do an effective job.
Weak controls allow criminals to get away and to regard themselves as successful. Deviant "solutions" came to be seen as keys to "success." Successful deviance then becomes a normative referent, contributing to a wider normative breakdown and overemphasis on goals at the expense of normative means. In the context of massive cultural shifts -- from the criminalizing of private profit and the hiring of labor outside the household to making them central values for a new social order -- the sense of right and wrong became fuzzy. As the deputy minister of Internal Affairs admitted at a 1992 press conference, "even our specialists find it difficult to determine the legal from the illegal -- to determine, for instance, what is profiteering and what is honest trade" (cited in Handelman, 1993). Corruption grew so much that up to 30% of illegal gains are reportedly paid to government officials (Glinkina, 1994; Lee, 1999). In the end, distinctions between white-collar crime, organized crime, corruption, and legitimate business are almost impossible to make. Lawbreaking behavior and success are fused. As a businessman told Handelman (1995: 139), "the truth is, everything you see around you, all our success, is not thanks to our wonderful economic laws. It's thanks to the fact that we do not obey them."
Dysnomic conditions also bring about anomie at the global level. As argued elsewhere (Passas, 1999), international law is more essential now than ever for the maintenance of world order and security. Yet, big powers are reluctant to contribute to the required pooling of sovereignty and have been blocking the development of an international criminal code and specific legislation to restrain their corporations. Dependent on rich countries for its operations, the U.N. has not been overly aggressive in pursuing these aims or in establishing a permanent international criminal tribunal. Globalism has thus run ahead of the creation of a desperately needed normative and enforcement infrastructure.
Existing international laws are applied selectively and never against one of the permanent members of the U.N. Security Counsel. This ad hoc approach and the extraterritorial application of national laws undermine the legitimacy of current laws and procedures. We are left with a legal patchwork of inconsistent and conflicting rules. An example of the effect of such asymmetries is the secrecy and anonymity available in certain jurisdictions that hinder investigative work by covering the tracks and proceeds of global offenders, de facto shielding them against prosecution and punishment. By exploiting the cracks between diverse state rules, companies continually commit crimes without law violation. Globalism also leads to a relativization of norms and facilitates law violations with a clear conscience (rationalizations and techniques of neutralization).
Finally, the border-policing problem in the former USSR is not unique, even if the underlying causes were specific to it and other European countries (Yugoslavia, Czechoslovakia). More generally, borders become porous, as technology and mobility enabled people, money, goods, and ideas to travel quickly and cheaply. Criminals can take advantage of this shrinking world, but law enforcement agencies are constrained by parochial laws and procedures. Though the reasons for the porousness may differ, the process and results are the same.
Conclusion
Tremendous structural strains have overwhelmed even the usually patient and submissive Russians. The economic situation deteriorated further, hopes were dashed, opportunities for criminal gain and for looting the USSR's assets multiplied, and the anomic societal context offered no assistance to anyone seeking to restore some law and order. In Russia and around the world, the neoliberal operation was successful, but the patients are being systematically frustrated, are starving, and subject to exploitation by corporations, criminal enterprises, and corrupt politicians. In short, globalization and neoliberalism spread analytically similar criminogenic processes that were once unique to the U.S. culture of the American Dream in a context of structural inequalities. Just as the world supposedly became freer, wealthier, more democratic, more enjoyable, and more equal, people find themselves poorer, more exploited, and facing increased hardships. Just as the need for strong normative guidance grows, norms break down or lose their legitimacy. Just as effective controls become necessary to slow down or stop the vicious cycle leading to higher rates of crime, a dysnomic regulatory patchwork remains in place largely because of nationalist insistence on sovereignty and states' unwillingness to allow the introduction of common principles and law enforcement mechanisms.
Two main points need to be reiterated here. First, it appears that global neoliberalism and serious crime go hand in hand. However, it would be erroneous to argue that stereotypical organized criminals are giving capitalism a bad name and undermining neoliberal policies. The implication is that, were we to rid ourselves of some very bad apples, everything would be fine. Rather, it appears that serious organizational misconduct is a consequence of such policies. Second, when we discuss transnational crime, we should bear in mind that it is not just the stereotyped ethnics who cause most problems. It may be that the biggest threat emanates from legitimate corporations and other organizations.
Detailed discussion of policy implications is beyond the scope of this article. The horizontal arrows in Figure 1 hint at the points of possible policy intervention. Myriad concrete ideas can be found in the literature, ranging from legal changes to informal controls, grass-roots movements, integration of economic growth with environmental and social protection, relocalization of production and consumption, etc. The most important ray of hope, however, is implicit in the foregoing analysis. Neoliberal policies and globalization are largely the fruit of (some) governments. They affect and are affected by governance. Therefore, governments have the ability to reverse some of these processes and to mitigate their adverse consequences. Otherwise, the current processes of globalization and neoliberalism will prove to be unsustainable and at a huge cost.
Situation with neoliberalism in the USA now is an almost perfect illustration of the credibility trap. One cannot allow the illusion to falter, even a little, to the bitter end. And as the fraud fades, the force intensifies, becoming almost rabid in its deflection. Because that illusion has become the center of a hollowed people's being, their raison d'être, a mythological justification for their existence. Chris Hedges made an apt analogy with The Fall of Berlin 1945
I came across a nice, compact interview with Chris Hedges which illuminates his thesis of the decline of the American Empire and the illusions and the end of rational thinking that accompanies it. Empires seem to give off quite a bit of flash in their latter stages, rather like the last gasp of a dying star.
The interviewer, Allan Gregg, does a particularly nice job of drawing Hedges out.
I would like to add an observation I came to in thinking further about the Sophie Scholl piece which I put up earlier today. Perhaps there is something about gardening that focuses the mind.
The almost frenetic preoccupation and adherence to the Nazi ideology in the latter stages of the war, when it was obvious to any rational observer that they could not win, is remarkable. I had been particularly struck in my reading some time ago with the 'wolf packs' of Nazis who had raged through Berlin, rounding up old men and even boys who had not joined the Volkssturm, and hanging them, even while the Russians were shelling the Reichstag. It never made sense to me until today.
"The radio announced that Hitler had come out of his safe bomb-proof bunker to talk with the fourteen to sixteen year old boys who had 'volunteered' for the 'honor' to be accepted into the SS and to die for their Fuhrer in the defense of Berlin. What a cruel lie! These boys did not volunteer, but had no choice, because boys who were found hiding were hanged as traitors by the SS as a warning that, 'he who was not brave enough to fight had to die.'I was reminded of this phenomenon by the trial of Sophie Scholl, and her words to the judge Roland Freisler, as he ranted his virulent condemnations at them. 'Soon you will be in our place,' she said to him. He did escape the hangman's noose at Nuremburg, but only by virtue of an Allied bomb in 1945. When his body was brought to hospital an orderly remarked, 'It was God's verdict.' He was buried in an unmarked grave, without ceremony and unmourned. Much like his beloved Fuhrer.When trees were not available, people were strung up on lamp posts. They were hanging everywhere, military and civilian, men and women, ordinary citizens who had been executed by a small group of fanatics. It appeared that the Nazis did not want the people to survive because a lost war, by their rationale, was obviously the fault of all of us. We had not sacrificed enough and therefore, we had forfeited our right to live, as only the government was without guilt."
Dorothea von Schwanenfluegel, Eyewitness account, Fall of Berlin 1945
This is an almost perfect illustration of the credibility trap. One cannot allow the illusion to falter, even a little, to the bitter end. And as the fraud fades, the force intensifies, becoming almost rabid in its deflection. Because that illusion has become the center of a hollowed people's being, their raison d'être, a mythological justification for their existence.
If the ideology had been a lie, then they are not heroes and gods on earth, but monsters and criminals, and their life has been self-serving and meaningless, without significance and honor. And that is the credibility trap.
And this is the US financial system today.
So the legitimacy of neoliberalism is gone since events of 2008 and consequences of this epochal event are still unclear. As chances that the USA will get rid of neoliberalism voluntarily are slim, we might be present in a crush of yet another empire. That might mirror the destiny of the USSR which fell when its ideology became delegitimized. With the key difference that the USA elite is much more aggressive and ready to use whatever means possible to preserve its status when it is under threat.
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