Tag Archives: Neoliberalism

Understanding Liberalism and Conservativism

I think it’s important to distinguish between liberal/conservative economics that pertain to how tax, management of property and trade works, then liberal/conservative politics that pertain to civil rights, law and social ideals etc, although the two can interweve with each other.

Case in point – neoliberalism.

Certain conservatives and liberals in the UK and for that matter, republicans and democrats in the USA practice neoliberal economics. Neoliberalism is very similar to classical liberalism, except it accomodates the new financialised world we live in today. Liberalism comes from the political economy philosophers like John Locke, Jean Jaques Roussaeu, David Hume and Adam Smith and it emerged with capitalism, offering a form of economics that could undermine the Feudal structures of the middle ages.

Basic particulars

Classical liberals/neo-liberals enforce negative rights in exchange for lower taxes[1], arguing that trade is not something the state should interfere with too much and that a more social liberal view of ‘high tax and positive rights’ would be too draining on the economy to sustain (known as the slim state[2]). They also advocate protection of private property from the state (one of the only functions of the state it does agree with), which is to be extended to military intervention overseas. The difference between classical and neo-liberalism is financialisation. As taxes are low or they were too high for certain demographics and they are forced or choose to leave the jurisdiction, this forces governments into debt in order to compensate, once the state can no longer acquire taxes from it’s citizens and can not pay back the loans to the banks that lend the money, the state is acquired by private interests.[3]

Debt Markets

Neoliberal economics run states like a firm, instead of based on principles like solidarity (positive rights to vote, education for all, healthcare and pensions), it instead operates to nationalise the debt and for the occupants of the state to repay that debt. It also advocates de-regulation of finance and trade agreements.[4] Debt, unlike taxes, can be sold and traded on the stock market. The private interests usually impose what is called ‘austerity'[5], which involves massive cut backs on funding public services. They open up the market in the state to private interests outside of the border of the state, selling off land and property that is then re-built under the guise of improvement and opportunity, but in reality it’s to boost the value of property in the area that can be sold to foreign interests. The effect of this is that no one on a lower-middle class wage can possibly afford to live in the area, they may be able to rent at best from a landlord with no social housing avaiable.[6]

Left or Right?

There are a number of other problems that I wont go into here, such as the privatisation of health care for the public as well as schools, outsourcing of trade and the crushing of labour unions[7]. The main thing to understand, is that ‘liberalism’ actually seems more like what we conventionally understand to be conservative, this is why Hillary Clinton was no longer trusted in the recent election[8], as she was pretty much in the same ideological view of Reagan. Neo-liberalism in it’s current form started in the 70’s under Thatcher and Reagan (Reaganomics), they were inspired by General Pinochet in Chile who had his ‘Chicago boys’ at his side, who helped him transform the state into a neo-liberal state.[9]

Intersectionality

Neo-liberalism boasts at being the cutting edge of progress, declaring an end to prejudice and hardship, claiming that everything is up for grabs, that inequality is a virtue and everyone gets what they deserve. The way they deal with economic problems is through austerity, making it practically impossible for low wage workers to resist their ruthless form of capitalism. It creates foundations for conceptions of inequality.
[10]

Social Liberalism, Socialism

Social liberalism seeks to at least offer welfare through higher taxation (high tax/positive rights), but given how many governments have conflicting interests with neo-liberals, I seriously doubt whether anything would change, the same goes for Marxist socialism. Somehow the leaders are supposed to be immune from corruption, but in reality they end up exploiting the masses like the worst of capitalists. Case in point, Lenin and Stalin.

Military Intervention

After all, no one wants to pay high taxes right? This is why military intervention comes into play and why liberals and conservatives don’t seem to differ much when it comes to war overseas. A state can justify a rise in tax for war, but not for social projects like building hospitals, funding pensions etc. The welfare state was created using money from oil in Iran (in Britain anyway) and that money helped to build the National Health Service.[11]

Global Division of Labour

Even though we call a state socialist, it has a combined link with capitalism. Cheap oil is a dream of the past, growth is impossible as China gets more and more powerful and this is why we see the problems we see today since the 2008 crash. It wasn’t just the bankers and speculators that were the problem, it’s about a fundamental shift in power to China and India. They have workers on $1.76 [12] per hour,while workers in Germany with all compensation costs like holiday pay and sickness etc, earn around $40.00 per hour! [13]

Protectionism and Outsourcing

The new forms of conservatism seem to be looking at more protectionist solutions, i.e.high import tarrifs from foriegn trade in order to preserve domestic industry and trade[14]. The problem is that of collective action, if you set your tarrifs high and expect others to let you export free of charge or at low tarrifs, think again! Protectionism didn’t work because everyone will do the same thing. The end result is trade death and the economy stops. Protectionism also has the problem of outsourcing to deal with. Manufacturing in the West has declined, but risen dramatically in the East through outsourcing. The West has a growing market of finance, in 2012, around 7,000,000 people worked in finance in the UK, while another 7,000,000 worked in the services industry, for example, baristas, food, dog-walking, strippers and cleaning. Manufacturing in the Uk was around 4,000,000 in 1997 but is now less than 2,000,000. There is nothing to protect as the wealthy make their fortunes by outsourcing to China and India.[15]

Liberalism and Conservatism in the Social and General Sense

Social issues concerning rights that are labelled as conservative or liberal, are perhaps easier to point out in the general definitions. Conservatives tend to be more about preserving tradtions and liberals tend to advocate equal opportunities for all, regardless of background, creed etc. Pressure politics is all we have left that even closely resembles democracy, but the problem is that while one group pushes and agenda to push through legislation in their favour for one particular cause, they leave other causes out to rot. For example, a pressure group seeking to get more funding for cancer research is more likely to have precendence over say, mental health.[16]

Police State

I personally see a difference between policing and governing – a state that is retrictive tends to be a police state,which we definitely live in today. Where as a government is set up to manage the affairs of millions of people in a variety of forms like democracy. I personally am an anarchist, so I don’t like anything that leads to domination of any kind. The way in which economics and politics overlap is due to the management of property. Civil rights come after the protection of property and capital.

Anyway, I have lots more information on this topic. I thought I would share it here as I was surpised at the actual economic meaning of liberal, which differs vastly from the usual meaning. In this day in age, no one can tell left from right anymore.

Sources:
[1] https://en.wikipedia.org/wiki/Classical_…re_beliefs – paragraph 8 – For society to guarantee positive rights requires taxation over and above the minimum needed to enforce negative rights.
[2] Classical liberals argued for what they called a “slim state”, limited to the following functions:

A Decentralized Federal Government to protect individual rights and to provide services otherwise could not be provided in a free market.
A common National Defense to provide protection against foreign invaders.
A Constitutional Democratic-Republican Government that guarantees and protects every individual’s God-given rights.
Laws to provide protection for citizens from wrongs committed against them by other citizens, which included protection of private property, enforcement of contracts and common law.
Federal public works that included a stable currency, standard weights and measures, and support of roads, canals, harbors, railways, communications and postal.
[3] https://en.wikipedia.org/wiki/History_of…cal_crisis
[4] https://en.wikipedia.org/wiki/Decline_of…eagall_Act
[5] http://www.bbc.co.uk/news/10162176
[6] http://england.shelter.org.uk/campaigns_…ing_crisis
[7] http://www.investopedia.com/terms/p/priv…iative.asp
[8] https://www.theguardian.com/commentisfre…ricas-fate
[9] https://en.wikipedia.org/wiki/Neoliberalism#Origins During the military rule under Augusto Pinochet (1973–1990) in Chile, opposition scholars took up the expression to describe the economic reforms implemented there and its proponents (the “Chicago Boys”).
[10] http://www.palgraveconnect.com/pc/doifin…95279.0007
[11] https://en.wikipedia.org/wiki/1953_Irani…’%C3%A9tat
[12] http://www.bls.gov/fls/china.htm
[13] http://www.bls.gov/news.release/pdf/ichcc.pdf
[14] http://www.nationalreview.com/article/43…et-economy
[15] http://www.ons.gov.uk/economy/economicou…2015-05-28 Note: the figures I have used come from Graham Turner and the Office for national statistics.
[16] Pressure politics: http://www2.warwick.ac.uk/fac/soc/pais/p…ntrush.pdf – see page 3 – it is relatively easy to attract media attention for an emotional campaign demanding that patients suffering from a potentially terminal illness, such as breast cancer, should be given an unproven treatment. Funds then have to be found from elsewhere in the NHS budget, possibly from conditions that attract less sympathy, such as mental health. Moreover, it would appear that campaigns by patient groups can be used by pharmaceutical companies who wish to promote sales of a particular drug.

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What is Capitalism and how can we Destroy it? New Series!

Reference Guide to Capitalism

Continue reading What is Capitalism and how can we Destroy it? New Series!

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Brexit | Neo-Liberalism | Economics Over Politics

Neoliberalism – Economics over Politics

The way a political organisation labels itself often holds sway on their influence. A political spectrum is a system of classifying different political positions upon one or more geometric axes that symbolize independent political dimensions. Commonly we use the terms “left and right” to distinguish between political ideals and practices.

Since the 1970s however, this divide has become almost obsolete, politics is governed by economics and the Brexit backlash was a statement of resistance against this phenomenon, the people want a movement where politics grasps the reigns of economics once more, but there is another meta layer behind the left and the right that unifies them as bound to the same economic principles that produce the main causes of resentment and the drive for change towards their preferred political ideology.

Liberal?

You would think that a party with a name like “Liberal Democrats” would be considered as “left”, when we look at their main ideals, we see “classical liberalism” and “neoliberalism”, which all sounds very nice, after all “liberal” means willing to respect or accept behaviour or opinions different from one’s own; open to new ideas, favourable to or respectful of individual rights and freedoms,  regarding many traditional beliefs as dispensable, invalidated by modern thought, or liable to change. They are technically described as “center”, which I would dispute is now center right after the coalition government, blatantly once Nick Clegg leaned toward the Tories instead of Labour and definitely when he raised university fees.

In reality and practice however, “Liberal” is as deceptive as it gets. Mainly when we hear any one of these liberals and how they propose we sort out various problems in society, they end up acting in a way that is, well, quite right wing and conservative, which is confusing to say the least.

Classical Liberalism

So what is classical liberalism? It drew on the economics of Adam Smith and on a belief in natural law, utilitarianism, and progress. It is one of the main ideals behind American Conservatism. Historically, they were opposed to the movement of social liberalism, that  child labour was forbidden, minimum standards of worker safety were introduced, a minimum wage and old age pensions were established, and financial institutions were regulated with the goal of fighting cyclic depressions, monopolies, and cartels. Classical liberals opposed these new laws, which they viewed as an unjust interference of the state. They argued for what they called a “slim state”, limited to the following functions:

Protection against foreign invaders, extended to include protection of overseas markets through armed intervention,    protection of citizens from wrongs committed against them by other citizens, which included protection of private property, enforcement of contracts, and suppression of trade unions. They assert that rights are of a negative nature which require other individuals (and governments) to refrain from interfering with the free market, whereas social liberals assert that individuals have positive rights, such as the right to vote, the right to an education, the right to health care, and the right to a living wage. For society to guarantee positive rights requires taxation over and above the minimum needed to enforce negative rights.

We can see how these classical liberals have set the theme we see today. Economics over Politics. Which brings us to Neoliberalism.

Neoliberalism today

Neoliberalism became prevalent in its current meaning in the 1970s and ’80s by scholars in a wide variety of social sciences and critics primarily in reference to the resurgence of 19th century ideas associated with laissez-faire economic liberalism. Thatcher and Reagan are the prime examples of the neoliberal ideal.

Its advocates avoid the term “neoliberal”; they support extensive economic liberalization policies such as privatization, fiscal austerity, deregulation, free trade, and reductions in government spending in order to enhance the role of the private sector in the economy.

The private finance initiative (PFI) is a way of creating “public–private partnerships” (PPPs) by funding public infrastructure projects with private capital. Developed initially by the governments of Australia and the United Kingdom, and used extensively there and in Spain, PFI and its variants have now been adopted in many countries as part of the wider programme of privatisation and financialisation driven by an increased need for accountability and efficiency for public spending.

Financialisation

The implementation of neoliberal policies and the acceptance of neoliberal economic theories in the 1970s are seen by some academics as the root of financialization, with the financial crisis of 2007–08 as one of the ultimate results.

‘It’s natural’

It’s quite surprising, when one takes into account that these are conservative or right wing ideals, yet it is under the guise of a liberal or left sounding name. It is essentially meritocratic, Neoliberalism sees competition as the defining characteristic of human relations. It redefines citizens as consumers, whose democratic choices are best exercised by buying and selling, a process that rewards merit and punishes inefficiency. It maintains that “the market” delivers benefits that could never be achieved by planning. We can see how classical liberalism has informed this ideology.

 

Attempts to limit competition are treated as inimical to liberty. Tax and regulation should be minimised, public services should be privatised. The organisation of labour and collective bargaining by trade unions are portrayed as market distortions that impede the formation of a natural hierarchy of winners and losers. Inequality is recast as virtuous: a reward for utility and a generator of wealth, which trickles down to enrich everyone. Efforts to create a more equal society are both counterproductive and morally corrosive. The market ensures that everyone gets what they deserve.

Troika

This definition scratches the surface of what Neoliberalism causes in our society, the other chief issues are how it views all citizens into a consumers. Then there is the European Troika, an organisation composed of the European Commission, European Central Bank and the International Monetary Fund. The Troika, is policing the countries that got themselves into trouble; governments are constitutionally bound to the principles of good housekeeping. Greek unemployment remains the highest in Europe at almost 25% – and just under 50% among the young. Many companies are relocating to Bulgaria, Albania, Romania and Cyprus as a result of over-taxation.. In Spain, it is now commonplace for three generations to survive on a single salary or a grandparent’s pension; unemployment is running at 26 per cent, wages go unpaid and the rate for casual labour is down to €2 an hour. Italy has been in recession for years, after a decade of economic stagnation, and 42 per cent of the young are without a job. In Portugal, tens of thousands of small family businesses, the backbone of the economy, have shut down; more than half of those out of work are not entitled to unemployment benefits. As in Ireland, the twenty-some-things are looking for work abroad, a return to the patterns of emigration that helped lock their countries into conservatism and underdevelopment for so long.

 

The commission’s cure for the Eurozone crisis prescribes neoliberalism finessed by technocrats. Neither Remain nor Leave has a credible vision of how things would go, notably as regards the EU’s own future.

 

With all of this uncertainty, it’s not hard to see why Brexit would seem appealing, where do you think all of these people, who are the victims of ‘fiscal austerity’ across the EU, are going to go?

 

The EU has emerged significantly more autocratic, German-French-dominated and right-wing, while lacking any compensatory charm.

 

Not having a say in how Brussels will manage trade and fees could be a problem however. On a wider, farfetched worry, the collapse of the Euro currency could be disastrous too.

Composition fallacy

Any resistance to the EU has been met by a fierce wrath from the neoliberal intelligentsia, calling anything that resembles resistance, right wing, yet the EU and neoliberalism in general and the way it has emerged, is anything but ‘left’ in the sense of improving socialism, or even advocating socialism to regulate capitalism.

Neoliberal effects on the EU

The Troika – it has no official name – was scrambled together in April 2010 to take over direction of the Greek economy, as the condition for its first EFSF loan. Composed of functionaries from the European Commission, the ECB and the IMF, it now governs Portugal, Ireland, Cyprus and Greece, and has been permanently inscribed in the European Stability Mechanism. The Troika issues Memoranda of Understanding on the same model as the IMF, which dictate every detail of the member states’ legislative programmes: ‘The government will ensure that the legislation’ – for cuts in health and education, public sector redundancies, reductions in the state pension – ‘is presented to Parliament in Quarter 3 and agreed by Parliament in Quarter 4’; ‘the government will present a Privatisation Plan to Parliament and ensure it is speedily passed’; even, ‘the government will consult ex ante on the adoption of policies not included in this Memorandum.’

 

The Troika’s record of economic management has been abysmal. Greek GDP was forecast to fall by 5 per cent from 2009 to 2012; it dropped by 17 per cent and is still falling. Unemployment was supposed to peak at 15 per cent in 2012; it passed 25 per cent and is still rising. A V-shaped recovery was forecast for 2012, with Greek debt falling to sustainable levels; instead, the debt burden is larger than ever and the programme has been renewed. No one has been held to account for this debacle. Further rounds of cuts are scheduled for 2013, without any economic rationale. Another 15,000 public sector workers have to be sacked to meet the requirements of this summer’s quarterly review; the entire staff of the Greek broadcasting corporation has been dismissed. The number of doctors by headcount fell by another 10 per, as in 2012; hospital costs are to be cut by another 5 per cent, after 8 per cent in 2012, and the Troika wants to see a substantial further reduction in hospital beds.

Question everything…except liberalism and capitalism, you sophist!

So pervasive has neoliberalism become that we seldom even recognise it as an ideology. We appear to accept the proposition that this utopian, millenarian faith describes a neutral force; a kind of biological law, like Darwin’s theory of evolution. But the philosophy arose as a conscious attempt to reshape human life and shift the locus of power.

Austerity catch 22

The question is whether or not, Britain, in or out of the EU, can stand against austerity while neoliberalism is the dominant economic practice on both sides of the political spectrum. Left and right are now obsolete distinctions.

Both neoliberalism and neo-conservatism although disagreeing on amoral principles, uphold free markets, austerity and privatisation, making the left and right divide of the political spectrum a blurred continuum.

Political correctness and social justice

One major component of neoliberalism however is its political correctness ideology, that on the surface may seem like it is heading towards tolerance and understanding of diversity, but in truth, it is just another means of production, another trend to sell, a fad, a brand. Neoliberalism takes that which is profound and turns into the profane, neoliberalism has slickly achieved three things to ensure its robust longevity: “first, it has enabled the mutation of the state into a firm; second, it has given birth to the responsibilised and self-governing citizen; third, it has constantly projected experiences of human precarity and risk as entrepreneurial developmental funding opportunity”. These adaptions are infused with social identities and categories. Alliances built by neoliberal politicians to assist the flow of money up the economic hierarchy are complex, flexible, and shifting, yet the contexts of their concretion are always forged by “the meanings and effects of race, gender, sexuality, and other markers of difference”

Myth of the ‘posts’ in society

Commonplace discourses assume that western societies have largely overcome problems of racism, sexism, and heterosexism, homophobia. Political myths of “posts”, post feminism and fantasies of transcendence are espoused by both liberal and conservative forces

Intersectionality

The result is a contradictory political and cultural climate replete with ideals of equality, accompanied by an unbending refusal to see the persistence of deeply entrenched inequalities of race, class, gender, sexuality, ability, and citizenship-status. Framing social life not as collective, but as the interaction of individual social entrepreneurs, neoliberalism denies preconditions leading to structural inequalities; in consequence, it congratulates itself for dismantling policies and discrediting movements concerned with structures of injustice. Thus neoliberal assumptions create the conditions allowing the founding conceptions of intersectionality—as an analytical lens and political tool for fostering a radical social justice agenda—to become diluted, disciplined, and disarticulated.

Consumer citizens

Ultimately, we see how neoliberalism has been the illness that has destroyed social services across the UK and Europe through privatisation and has worshipped the free market in a very exploitative way that looks for cheap labour while advocating austerity, consumerism and debt slavery.

How can we destroy it?

As we have examined the ideology behind left and right, we should seek a form of politics that can tame economics, scrap the fiscal policies of austerity and preserve social services like health care and education, schools that are better equipped for tolerance and diversity without the inauthentic shade of marketing tolerance and diversity for the ends of laissez-faire capitalism.

A coherent alternative has to be proposed. the central task should be to develop an economic Apollo programme, a conscious attempt to design a new system, tailored to the demands of the 21st century.

Also see: The new series about capitalism on Disjunctive Media

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