A Critque of Neoliberalism

New Economic Perspectives continues to produce outstanding work.  This particular piece is a 2 part study (so far) by Michael Hoexter of Neoliberal economic philosophy and its apologia for what is nothing more than rank Class Warfare of the .1% against the 99.9%.

While I am highlighting what I consider the most salient points I strongly urge you to read the original which is not as wonky or hard to grasp as you might expect from an econo-blog.

Like a Wasting Disease, Neoliberals, Libertarians & the Right are Eating Away Society’s "Connective Tissue&quot – Part 1

By Michael Hoexter, New Economic Perspectives

May 29, 2013

In an industrial or post-industrial society, a civilization with a complex division of labor dispersed throughout a network of metropolitan regions connected with each other and with smaller cities and rural areas, a class of connecting goods and services is required to keep the society and economy cohesive and functioning.  Unlike the goods bought and sold on markets, these mediating or connecting goods are not themselves often objects of desire for purchase by those who use or otherwise benefit from them. In the hypotheses of social theorists and politicians influenced by neoclassical economic ideals, these goods, they think, ought to be delivered via markets and people ought to pay directly for them in market-like cash transactions. As it has turned out in reality, without a social and political commitment and social pressure to fund these goods and services, individuals in isolation and businesses as a group tend to want to “free ride” and not pay for connective goods and services that are usually the frame but not the focus of everyday consciousness in a modern society. Despite the lack of consistent private markets for most connective goods and services, these “in-between” goods and services are vital and fundamental to the existence and maintenance of something like a civilization, a livable complex society with a strong economy.

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If such connections were owned and controlled entirely by profit-minded corporations as has been flirted with over the past few decades, they could easily strangle the economy via the exertion of monopoly power and pricing.  The resulting “tollbooth economy” would be a neofeudal outcome, with owners of infrastructure exacting tolls on commerce and on society as a whole as did the feudal lords a millennium ago.  This is why government has been, in the successful mixed economy model that emerged during the 20th Century, the most common supplier, owner and operator of critical portions of the society’s infrastructure, the “in-between” places that connect people’s and corporations’ private properties.  The strong mixed economy model, typified by the European social democracies, Australia, the mid-20th Century US, and Canada, with a government regulating the private sector and providing many vital services, is actually the only successful model of a complex industrial or post-industrial society and economy.  Departures from a strong mixed-economy model are in the developed world necessarily speculative social experiments on a grand scale, even though these departures from what has worked in the past are almost never announced as such.

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Contemporary political disputes about the nature of government and its role in the economy can, in part, be boiled down to whether the parties involved believe that empathy is at all important to the functioning of society and, for that matter, is even worthy of attention.  The traditional Right sees empathy, except in certain extraordinary circumstances, as a sign of weakness or as a phenomenon of the “private sphere”, traditionally organized around the household and considered to be “feminized”, linked to the (misogynistic) notion of the feminine as being inferior in value to the masculine. Movements identified with the Left have tended to fight for the role of a generalized empathy with basic human needs and human solidarity within the public sphere, focusing for the most part on equal rights and “treating others as you would want to be treated”.   By contrast, the Right has often celebrated cruelty as a sign of toughness or loyalty to a cause, making room for empathy only in the context of mystical bonding rituals between for the most part men or between a leader and his followers.

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The Hidden Utopia of Neoliberalism

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There emerged various economic theories, which formed the “business end” of neoliberal policy recommendations that suggested that cutting taxes on the wealthy and loosening regulations would spur economic growth and also, in the wishful thinking of early supply-side theory, paradoxically increase tax collections because of that growth.  The model-individual within neoliberal political and economic theory was the entrepreneur or investor who needed to be given the maximal “freedom” from government intervention or influence to make judicious business or investing decisions.  The institution that should rule society according to neoliberalism was “the market”, the social area in which self-interested economic actors interacted, which should be likewise “freed” from government support or intervention.

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Neoliberalism’s worldview is utopian in this regard because neoliberals, as well as the extreme libertarian version of neoliberalism, have for the most part assumed as “givens” the already-existing benefits (to them) offered by a very substantial government and generated by the complex internetworked society it enables, yet wishing government itself would disappear or diminish, leaving its effects behind.  Thus in a form of magical thinking or “splitting“, neoliberals have come to believe as if it were accomplished fact that they can create a society that  is “purified” of government but leaves what they value from government, its products and services or their positive effects, behind, very much like Lewis Carroll’s Cheshire Cat.  Neoliberals and libertarians do not for the most part want to return to a society that is composed entirely of extended family networks, a tribal society in fact, or at least most of the Right’s mainstream does not have a taste for the likely emergence of  a Mad Max style world.

Neoliberalism, like traditional reactionary conservatism, also shuns the role of empathy in the public sphere, seeing in it a weakness or a trap, from which the “clean” purity of the market and competition would free us.  In the neoliberal worldview, everybody is almost entirely self-interested and no one, including political leaders, is doing anything out of a sense of human solidarity or obligation to humanity as a whole but rather out of a self-interested calculus. The ultimate neoliberal theory of politics, James Buchanan’s public choice theory, marginalizes or rules out the role of altruistic or public-spirited motivation in the actions of political leaders.  One wonders whether or when this theory based on neoclassical economics becomes a self-fulfilling prophecy, once the assumption of self-interest as a sole motivation in politics is made.  More altruistically minded people are certainly discouraged from entering government service within the current system of legalized corruption in American government.

Like a Wasting Disease, Neoliberals, Libertarians & the Right are Eating Away Society’s "Connective Tissue&quot – Part 2

By Michael Hoexter, New Economic Perspectives

May 29, 2013

Corporatocracy/Plutocracy:  The Neoliberal Compromise with Reality

While there are a certain number of “true believers” in the neoliberal ideal that tend to congregate around the banner of libertarianism or related concepts, a vast swath of the political class and ruling elite has been pulled to the right by neoliberalism without openly embracing its hidden utopia.  These political and economic “realists” or “pragmatists” tend to see the true believers in neoliberal ideology as either an ideological “fig-leaf” that can provide a more appealing cover for the agenda of existing large private interests or, occasionally, as a fanatical embarrassment if they show too strong a belief in libertarian ideals. The notion of defunding public services and reducing public regulation of the private sector has a powerful appeal to many corporate and wealthy interests.  So powerful is this appeal in fact that the label and concept of “libertarianism,”  which is now adopted by the most other-worldly, some would say “idealistic”, individuals in the neoliberal spectrum, was coined by a US business lobbyist in the late 1940’s.  

The potentially “messy” idealistic part of what now is called “libertarianism”, tends then in practice to be sidelined or filtered out of actual neoliberal politics and policy.  Monopolies and oligopolies are not confronted or broken up.  Government support and favorable treatment for large corporations are not cut but are often increased or rebranded and enhanced.  The neoliberal ideal is realized only insofar as the interests of the more vulnerable and less wealthy are shunted aside within the policies of government while the interests of the powerful and wealthy are promoted under the cover of the neoliberal ideal of a “streamlined” and “fiscally responsible” government. Tax burdens are cut for the wealthiest while the tax burdens of the middle and lower classes are increased.

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The seemingly universalizing philosophy of neoliberalism which bases its intellectual appeal and moral authority on the notion that it is about defending liberty, particularly liberty of the individual, then encounters a substantial inconsistency when confronted with the actions of neoliberals once they achieve political power.  The central raison d’etre of neoliberalism, defense of liberty, then appears to be more of a “belief of convenience” for most neoliberals, as the attractions of using political and military power to further their own personal agendas or the economic agendas of political patrons becomes paramount.  Even libertarians, who decry “coercion” by government, spend an inordinate amount of their energy criticizing taxation while often ignoring or minimizing the use and abuse of military force as well as infringements of human rights and civil liberties at home and abroad.  The primary liberty which concerns both them and more mainstream neoliberals is the freedom to own and exercise private property rights in as expansive a manner as possible.  It can be reasonably asserted that most libertarians are "propertarians", focused primarily on real and imagined threats to the private ownership of property.  “Freedom” becomes an ideological excuse for personal acquisitiveness and greed.

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Neoliberalism has seen some of its greatest triumphs in spreading its ideology throughout society by temporarily peeling away the traditional reactionary-Right envelope from which its original leaders emerged.  The early neoliberal leaders, Reagan, Pinochet, and Thatcher had some or all of the marks of the traditional authoritarian Right in their style of speech and the cultural preferences they expressed and represented.  Entirely different in appearance and mannerisms were the leaders of the more leftward parties that accommodated themselves to or adopted wholesale the neoliberal political-economic ideological framework.  Bill Clinton and Tony Blair in the 1990’s provided a younger “cooler” image, the image of the Baby Boom generation, while at the same time supporting a greater “marketization” of the economy and holding out the private financial and corporate economy as the model for all social organization.  Clinton, but also Blair to some degree, was known for his ability to “feel your pain”, to express a theatrical-seeming empathy for others that did not question the fundamentals of the neoliberal vision of society.

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The current US President, Obama, has functioned almost perfectly as an ersatz “Left” for media and political consumption, despite his for the most part right-of-center neoliberal policy initiatives and political philosophy.  During his tenure the sham conflict between Right and pseudo-Left has reached a fever pitch that obscures the advancing development and entrenchment of the plutocratic-corporatocratic class as the de facto rulers of the United States.  The neoliberal Right in America has become so ideologically extreme that Obama’s timid forays into corporate-friendly reform are treated as if they represent the cutting edge of progressivism by a media focused largely on politics as a series of culture and personality clashes or a “horse-race”.

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Obama’s solid support for corporate- and bank-friendly policy is hidden from the view of many behind his occasional soaring rhetoric and limp efforts at reform which to supporters, so far, have been treated as either progressive or a form of pragmatic progressivism that is the only “realistic” alternative.  A reformer more than Bush his predecessor, Obama is fundamentally a rationalizer of neoliberalism, solidly evincing the belief in the notion that government must remain a handmaiden of corporate interests and beholden to the rich for its supply of money, either for campaigns or via the notion that government acquires its money by taxation.  A generation of progressives that can remember only “identity politics” and neoliberal Presidencies of the Right and pseudo-Left  have been to date adequately fooled or cowed by Obama’s relatively sympathetic personality and cultural identity as the first African-American President to criticize him as openly and roundly as is needed.  The reticence to criticize Obama is as much an expression of racism as is the Right’s tendency to demonize him as a “Kenyan socialist”.

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Fundamentally the movement to create a better world is based on human empathy and caring for each other and for future generations.  “Left” neoliberal leaders like Clinton, Blair and now Obama attempt to consciously or unconsciously siphon off people’s empathic impulses to ends that are harmless to the neoliberal oligarchy, the dominance of the large financial institutions, multinational corporations, and very wealthy individuals.  More than even Clinton before him, Obama is a master of temporarily capturing the impulse to do good and turning it to ends that fundamentally will not change the basis of the current corrupt social-economic order.

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As I am finishing the writing of this long piece, we have had as clear a demonstration as any of the decades long attack on the connective function of government works in the collapse of the fifty year old I-5 bridge over Washington’s Skagit river.  This bridge and Interstate 5 tie the North America’s Pacific Coast more closely together.  That, in an earlier era, government, a government led by the more conservative American political party, the Republicans, bound Americans closer together via the building of the Interstate system and related infrastructure is an achievement that seems alien in the neoliberal era.  That the existing, outdated infrastructure of the US is now in dangerous disrepair is a tribute to the thirty year dominance of neoliberalism in American politics as well as the faulty, dominant ideas about government’s role and government finance that spring from it.

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After toying with climate change as an issue a number of times during his Administration, Obama is now flirting with the issue once again, calling out the extreme Right in Congress on their denial of human-caused global warming.  Obama could attempt to yoke the issue once again to his neoliberal vision of a government and society beholden to large private interests, while suggesting that it is an impossibility that we would have a government that steers independently of, for instance, the economic interests of the fossil fuel industry, as well as other incumbent industries.  He is capable of perverting this issue as he has others or flirting with and exhausting well intentioned people.  We will need to persist in viewing the world as it is, and resist the pull of leaders who attempt to hijack our better impulses for their own or their patrons’ purposes.

We will need in too short an order, to repair much of the damage that has been inflicted by neoliberal political actors upon our societies’ cohesiveness and ability to coordinate action.  All this needs to happen before it is too late for a recognizable human civilization to thrive on this planet.