Tuesday, September 27, 2016

Herr Professor Trumpf Probably Never Heard Of Hayek, But I'm Sure Paul Ryan Will Try Explaining His Neoliberal Doctrine To Him


Ryan and his horde of congressional zombies have discovered hash tags and can't get enough of #BetterWay which is nothing more than a package of failed reactionary austerity plans that would utterly destroy the lives of working families. To Paul Ryan, whose intellectual development stopped in junior high school when he read his first Ayn Rand novela, #BetterWay is also the excuse for his support for as unqualified and dangerous a presidential candidate as Donald J. Trump. "He'll sign our legislation," he promises others interested in his goals for continuing the catastrophic neoliberal agenda Ryan has built his sorry career around.

George Monbiot, writing in Friday's Guardian asked a crucial question the neoliberal disaster for working families, namely, why the left has been so ineffective in fighting it. In fact, he says, the left hasn't even bothered to define what it is and what dangers are lurking behind it. "It has," he offered, "played a major role in a remarkable variety of crises: the financial meltdown of 2007‑8, the offshoring of wealth and power, of which the Panama Papers offer us merely a glimpse, the slow collapse of public health and education, resurgent child poverty, the epidemic of loneliness, the collapse of ecosystems, the rise of Donald Trump. But we respond to these crises as if they emerge in isolation, apparently unaware that they have all been either catalysed or exacerbated by the same coherent philosophy; a philosophy that has-- or had-- a name. What greater power can there be than to operate namelessly?" See how much Paul Ryan you recognize in this description:
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.

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.

We internalise and reproduce its creeds. The rich persuade themselves that they acquired their wealth through merit, ignoring the advantages-- such as education, inheritance and class-- that may have helped to secure it. The poor begin to blame themselves for their failures, even when they can do little to change their circumstances.

Never mind structural unemployment: if you don’t have a job it’s because you are unenterprising. Never mind the impossible costs of housing: if your credit card is maxed out, you’re feckless and improvident. Never mind that your children no longer have a school playing field: if they get fat, it’s your fault. In a world governed by competition, those who fall behind become defined and self-defined as losers.

...The term neoliberalism was coined at a meeting in Paris in 1938. Among the delegates were two men who came to define the ideology, Ludwig von Mises and Friedrich Hayek. Both exiles from Austria, they saw social democracy, exemplified by Franklin Roosevelt’s New Deal and the gradual development of Britain’s welfare state, as manifestations of a collectivism that occupied the same spectrum as nazism and communism.

In The Road to Serfdom, published in 1944, Hayek argued that government planning, by crushing individualism, would lead inexorably to totalitarian control. Like Mises’s book Bureaucracy, The Road to Serfdom was widely read. It came to the attention of some very wealthy people, who saw in the philosophy an opportunity to free themselves from regulation and tax. When, in 1947, Hayek founded the first organisation that would spread the doctrine of neoliberalism-- the Mont Pelerin Society-- it was supported financially by millionaires and their foundations.

With their help, he began to create what Daniel Stedman Jones describes in Masters of the Universe as “a kind of neoliberal international”: a transatlantic network of academics, businessmen, journalists and activists. The movement’s rich backers funded a series of thinktanks which would refine and promote the ideology. Among them were the American Enterprise Institute, the Heritage Foundation, the Cato Institute, the Institute of Economic Affairs, the Centre for Policy Studies and the Adam Smith Institute. They also financed academic positions and departments, particularly at the universities of Chicago and Virginia.

As it evolved, neoliberalism became more strident. Hayek’s view that governments should regulate competition to prevent monopolies from forming gave way-- among American apostles such as Milton Friedman-- to the belief that monopoly power could be seen as a reward for efficiency.

...[I]n the 1970s, when Keynesian policies began to fall apart and economic crises struck on both sides of the Atlantic, neoliberal ideas began to enter the mainstream. As Friedman remarked, “when the time came that you had to change ... there was an alternative ready there to be picked up.” With the help of sympathetic journalists and political advisers, elements of neoliberalism, especially its prescriptions for monetary policy, were adopted by Jimmy Carter’s administration in the US and Jim Callaghan’s government in Britain.

After Margaret Thatcher and Ronald Reagan took power, the rest of the package soon followed: massive tax cuts for the rich, the crushing of trade unions, deregulation, privatisation, outsourcing and competition in public services. Through the IMF, the World Bank, the Maastricht treaty and the World Trade Organisation, neoliberal policies were imposed-- often without democratic consent-- on much of the world. Most remarkable was its adoption among parties that once belonged to the left: Labour and the Democrats, for example. As Stedman Jones notes, “it is hard to think of another utopia to have been as fully realised.”

It may seem strange that a doctrine promising choice and freedom should have been promoted with the slogan “there is no alternative.” But, as Hayek remarked on a visit to Pinochet’s Chile-- one of the first nations in which the programme was comprehensively applied-- “my personal preference leans toward a liberal dictatorship rather than toward a democratic government devoid of liberalism.” The freedom that neoliberalism offers, which sounds so beguiling when expressed in general terms, turns out to mean freedom for the pike, not for the minnows.

Freedom from trade unions and collective bargaining means the freedom to suppress wages. Freedom from regulation means the freedom to poison rivers, endanger workers, charge iniquitous rates of interest and design exotic financial instruments. Freedom from tax means freedom from the distribution of wealth that lifts people out of poverty.

As Naomi Klein documents in The Shock Doctrine, neoliberal theorists advocated the use of crises to impose unpopular policies while people were distracted: for example, in the aftermath of Pinochet’s coup, the Iraq war and Hurricane Katrina, which Friedman described as “an opportunity to radically reform the educational system” in New Orleans.

Where neoliberal policies cannot be imposed domestically, they are imposed internationally, through trade treaties incorporating “investor-state dispute settlement”: offshore tribunals in which corporations can press for the removal of social and environmental protections. When parliaments have voted to restrict sales of cigarettes, protect water supplies from mining companies, freeze energy bills or prevent pharmaceutical firms from ripping off the state, corporations have sued, often successfully. Democracy is reduced to theatre.

Another paradox of neoliberalism is that universal competition relies upon universal quantification and comparison. The result is that workers, job-seekers and public services of every kind are subject to a pettifogging, stifling regime of assessment and monitoring, designed to identify the winners and punish the losers. The doctrine that Von Mises proposed would free us from the bureaucratic nightmare of central planning has instead created one.

Neoliberalism was not conceived as a self-serving racket, but it rapidly became one. Economic growth has been markedly slower in the neoliberal era (since 1980 in Britain and the US) than it was in the preceding decades; but not for the very rich. Inequality in the distribution of both income and wealth, after 60 years of decline, rose rapidly in this era, due to the smashing of trade unions, tax reductions, rising rents, privatisation and deregulation.

The privatisation or marketisation of public services such as energy, water, trains, health, education, roads and prisons has enabled corporations to set up tollbooths in front of essential assets and charge rent, either to citizens or to government, for their use. Rent is another term for unearned income. When you pay an inflated price for a train ticket, only part of the fare compensates the operators for the money they spend on fuel, wages, rolling stock and other outlays. The rest reflects the fact that they have you over a barrel.

Those who own and run the UK’s privatised or semi-privatised services make stupendous fortunes by investing little and charging much. In Russia and India, oligarchs acquired state assets through firesales. In Mexico, Carlos Slim was granted control of almost all landline and mobile phone services and soon became the world’s richest man.

Financialisation, as Andrew Sayer notes in Why We Can’t Afford the Rich, has had a similar impact. “Like rent,” he argues, “interest is ... unearned income that accrues without any effort.” As the poor become poorer and the rich become richer, the rich acquire increasing control over another crucial asset: money. Interest payments, overwhelmingly, are a transfer of money from the poor to the rich. As property prices and the withdrawal of state funding load people with debt (think of the switch from student grants to student loans), the banks and their executives clean up.

Sayer argues that the past four decades have been characterised by a transfer of wealth not only from the poor to the rich, but within the ranks of the wealthy: from those who make their money by producing new goods or services to those who make their money by controlling existing assets and harvesting rent, interest or capital gains. Earned income has been supplanted by unearned income.

Neoliberal policies are everywhere beset by market failures. Not only are the banks too big to fail, but so are the corporations now charged with delivering public services. As Tony Judt pointed out in Ill Fares the Land, Hayek forgot that vital national services cannot be allowed to collapse, which means that competition cannot run its course. Business takes the profits, the state keeps the risk.

The greater the failure, the more extreme the ideology becomes. Governments use neoliberal crises as both excuse and opportunity to cut taxes, privatise remaining public services, rip holes in the social safety net, deregulate corporations and re-regulate citizens. The self-hating state now sinks its teeth into every organ of the public sector.

Perhaps the most dangerous impact of neoliberalism is not the economic crises it has caused, but the political crisis. As the domain of the state is reduced, our ability to change the course of our lives through voting also contracts. Instead, neoliberal theory asserts, people can exercise choice through spending. But some have more to spend than others: in the great consumer or shareholder democracy, votes are not equally distributed. The result is a disempowerment of the poor and middle. As parties of the right and former left adopt similar neoliberal policies, disempowerment turns to disenfranchisement. Large numbers of people have been shed from politics.

Chris Hedges remarks that “fascist movements build their base not from the politically active but the politically inactive, the ‘losers’ who feel, often correctly, they have no voice or role to play in the political establishment.” When political debate no longer speaks to us, people become responsive instead to slogans, symbols and sensation. To the admirers of Trump, for example, facts and arguments appear irrelevant.

Judt explained that when the thick mesh of interactions between people and the state has been reduced to nothing but authority and obedience, the only remaining force that binds us is state power. The totalitarianism Hayek feared is more likely to emerge when governments, having lost the moral authority that arises from the delivery of public services, are reduced to “cajoling, threatening and ultimately coercing people to obey them.”

Like communism, neoliberalism is the God that failed. But the zombie doctrine staggers on, and one of the reasons is its anonymity... [W]hen neoliberalism fell apart in 2008 there was ... nothing. This is why the zombie walks. The left and centre have produced no new general framework of economic thought for 80 years.

A cohesive and compelling alternative isn't likely to be coming from Pelosi (let alone her "ideas and messaging man," Blue Dog Steve Israel). In fact, the New Dems and Blue Dogs are the embodiment, as much as Republican hacks like Paul Ryan, of neoLiberalism. Is there a solution? It has nothing to do with the DCCC or the corrupted and sclerotic Democratic Party establishment. But it has everything in the world to do with the next generation of Democratic leaders, from Ted Lieu, Elizabeth Warren, Bernie Sanders, Alan Grayson and Barbara Lee to Zephyr Teachout, Pramila Jayapal, Bao Nguyen and Jamie Raskin.

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At 7:10 AM, Anonymous Anonymous said...

In the 1930's, it took actual starving in the streets for FDR to have the majority support of Americans for his liberal agenda. There was no social security, unemployment benefits or medicaid to fill basic gaps. Nowadays, people are not starving, due to government programs, and thus apparently do not feel enough pain to turn progressive and fight the oligarchy. Some even view Trump as the savior.

At 7:34 AM, Anonymous wjbill said...

Great post, thanks for putting it together.

At 9:40 AM, Anonymous Anonymous said...

"As the domain of the state is reduced, our ability to change the course of our lives through voting also contracts. Instead, neoliberal theory asserts, people can exercise choice through spending."

One might say lesser of evil dominant politics reduces voters to choose the neo-liberal ships sinking speed, but never allows them to exit the neo-liberal ship. Voting for a progressive candidates causes the ship's captive choir to sing morbid verses of "can't win & wasted vote" to those of us voting aboard the SS Democracy life boat. Voters do have choices but they've forgotten how to swim.

At 11:24 AM, Anonymous Anonymous said...

Anonymous @ 9:40 AM:

A vote for Bernie Sanders was worth the effort, and will be worth the effort if a candidate of his experience, expertise, and caliber runs again. A vote for an incompetent such as Jill Stein, who has no clue how the federal government works, is indeed a wasted vote, and there will be nothing "progressive," or responsible, about it.

At 11:54 AM, Anonymous Anonymous said...

Responsible to what? War profits? wall street exemption from taxes? insurance company profits vs single payer medical programs? Secret trade deals that usurp domestic sovereignty? Presidential debates controlled by the two corporate party's & not the league of women voters? Superdelegates? Bernie and Jill's agenda are practically identical, yet you are so fearful of Trump, you've talked yourself into not voting for progressive policy unless you think you can win. Good luck with your Trump like winner mentality as you have abdicated your beliefs due to fear. The ship is sinking and you have no solutions.

At 4:01 PM, Anonymous Anonymous said...

The Democrats will do nothing to harm the hand which hands out the bribery.

At 6:18 PM, Anonymous Anonymous said...

Anonymous @ 11:54 AM:

My solution is to vote for Clinton. If you don't fear a Trump presidency, you are out of touch with reality.


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