Wednesday, June 1, 2016

Death Notice for Neoliberalism?

Neo what? You may not be paying enough attention to political labels and categories, particularly when they don't seem to fit any of the standard Dem-liberal vs. GOP-conservative model.

Neoliberalism was born in the thirties in Europe (where it was also known as the "Middle Way" or the "Third Way"). Its central tenet is that private corporations ought to be free to do whatever they want, and neo-libs love free trade, deregulation, privatization, Margaret Thatcher and Ronald Reagan. Wait-- why does this thing even have "liberal" in its name? Because 1930s Europeans were wacky that way, I guess. Or maybe it's because it wants to "liberalize" the movement and accumulation of money.

Neoliberalism is about the idea that the private sector can do everything so much better than the public sector, that competition is the secret to excellence, that a truly free market will create excellence and wealth for all. And as we can immediately recognize, it has been embraced by prominent members of both parties.

It is well-positioned to sell to both right and left. On the right, you can take solace that it makes the government smaller and directs lots and lots (and lots and lots) of tax dollars to private sector interests. On the left, you can take solace that neolibs preserve government programs-- they've just hired some private company to take care of the programs. If something's worth doing, it's worth paying some private company tax dollars to do it.

Groups like ALEC, the legislation mill where private corporations get to tell elected legislators what bill they ought to pass-- well, that's just a natural outgrowth of the neolib philosophy. The public sector really ought to be working for the private sector, not getting in their way, telling them what regulations they must follow, and telling them how to play fair. The worst horror stories you've heard about the TPP, like the secrete tribunal where companies can sue countries for interfering with the company profits-- that's how a neolib thinks the world should work.

For thirty or forty years (depending on who's counting) thought leaders and political leaders and leaders of leaders in shadowy rooms have supposedly been embedding neoliberalism in everything. That group of embedders would include the people who run the world's financial systems, all the way up to the International Monetary Fund. The IMF has been a huge fan of neoliberalism.

Which is why it is big news this when the IMF publishes a report entitled "Neoliberalism: Oversold?" and comes damn close to saying, "Yeah, we were totally wrong on that one. Sorry for the last forty years of economic inequality and mess."

Their simplified explanation of neoliberalism is that there are two planks-- plank one is increased competition, and the other is less government via privatization and shrinkage.

Mind you, they are not doing a complete 180-- the report says that neoliberalism has delivered on some of its promise through international trade that helped poverty in some areas, foreign investment that transferred tech to emerging economies, and privatization that increased efficiency cheaply in some places. But all is not rosy. For instance, the report uses this as a big fat pull quote:

Instead of delivering growth, some neoliberal policies have increased inequality, in turn jeopardizing durable expansion.

They could be quoting virtually any not-a-neolib of the past four decades, but no-- that's the IMF. And here's another shocker of a pull quote:

Governments with ample fiscal space will do better by living with the debt.

There's a lot more to it in several reports which are actually kind of hard to get to on the web, and which also require a certain level of eco-wonkery skill. But you can read the astonished reactions everywhere, from the people who want to say "I told you so" to the people who are a little more detached. The refrain is the same-- if the IMF thinks maybe neoliberalism is not actually working, then something is up.

Of course neoliberalism is the secret sauce that explains why Barrack Obama and Jeb Bush and Hillary Clinton and Whitney Tilson and the (supposedly left-leaning) Center for American Progress and the (theoretically right-tilted) Fordham Institute all appear to be singing in the same choir from the same hymnal when it comes to education. I'm not a huge fan or student of political theory labels, but there is a name for what unites the vast majority of reformsters, and the name is neoliberalism-- the belief that a free market filled with privatized providers (of both education, schools and teachers) and scraped free of as many government regulations as possible (including those damned unions) will bring us all to a shiny promised land.

That, my brothers and sisters, is the technical wonky political theory name for what ails us, and now one of its most staunch believers, defenders, priests and acolytes is suggesting in what qualify as loud tones for the economics wonky world that maybe it doesn't actually work after all.

After all these years, neoliberalism has not spread the wealth, not lifted up the poor, not provided excellence, not made government more effective or efficient, not done much of anything except make a small group of people very, very rich-- rich enough to start running governments and telling elected officials what to do. Lots and lots and lots of people noticed long ago that it wasn't working-- and have said so repeatedly. But to have the IMF notice something and say something out loud, in print-- that is a new thing. 

Yes, there are caveats, hedges, fine print, details and a world of quibbles. But the foundation has cracked. It may be years before that does us any good in public education-- the idea that privatized competition breeds excellence has, despite all clearly visible evidence to the contrary, grown strong roots in our culture. The body may keep kicking long after the head has died. But for all that, for all the time me have to wait for the street dancing, this is still good news. I'd suggest we bow our heads for a moment, but there's nothing in this news to be sad about.



  1. Neoliberal economic philosophy, as developed in the 1980's, goes straight back to 19th century classical liberal economic philosophy. It was a belief in laissez-faire, unregulated (free) trade. Government exists to protect individuals from other individuals; to protect against foreign invaders, but not only that, to use armed intervention to protect overseas markets; and to protect private property, enforce business contracts, and suppress trade unions. Government does not exist to ensure worker safety or to protect the consumer.

    Social assistance must be limited because it interferes with the free market. Collective bargaining is bad because it hurts "individual" rights. The only rights people have are "negative" rights: the right of an individual to be able to practice free trade without interference from government or other individuals. "Positive" rights such as the right to vote, to education, to health care, to a living wage, do not exist.

    Poor urban conditions are inevitable, but the poor don't deserve wealth redistribution. If the poor are poor, it's their fault. If the poor starve and die, that's good, because that limits population growth. Democracy is not a good thing, because the majority might not respect private property.

    Neoliberalism is 19th century classical liberalism with an enhanced role for the private sector. Classical liberalism believed in a role for government in building and maintaining public institutions, doing public works, ensuring a stable currency and standard weights and measures, and supporting roads, railroads, and postal and communication services. In the late 19th century, neo-classical liberalism, in its extreme form, advocated social Darwinism. Right-wing libertarianism (Koch brothers) is the modern neoliberal version of neo-classical liberalism and advocates the privatization of the whole of the public sector; this is also called anarcho-capitalism.

    Interestingly, many of the leading libertarian writers are also dominionist Calvinist Christian Reconstructionists. Calvinists believe a few people are "chosen" by God to be saved. Not because of anything they've done, like good works, or what they believe; but if they're successful, that shows that they've been "chosen". Dominionists not only believe the government should be ruled by Christian precepts, they believe the "chosen few" are Biblically mandated to "occupy" all secular institutions, and to rule the "kingdoms" of education, science, the arts, etc.

  2. (Cont.)
    Classical liberal economists thought economic depressions were impossible until a series of them happened, culminating in the Great Depression. But they wouldn't give up their beliefs, and we had the Great Recession. (I remember when the Recession happened, Chris Matthews was postulating the End of Capitalism. No, no. Let's just double-down on neoliberalism.) This belief that the "Invisible Hand" of the market will magically fix everything is the religious-like belief of the ideologue. That's why I like John Kenneth Galbraith. He isn't an ideologue.

    Galbraith "rejected the technical analysis and mathematic modeling of neoclassical economics as being divorced from reality...he believed that economic activity could not be distilled into invisible laws, but rather was a complex product of the cultural and political milieu in which it occurs." He knew that government regulation and collective bargaining are necessary to provide balance and make markets more efficient.

    Galbraith wrote books in a "clear and concise style, comprehensive to lay readers, not just economists." I'm not surprised Paul Krugman supports Hillary Clinton so strongly; Krugman is a critic of Galbraith. He doesn't like that Galbraith de-mystifies economics; if lay people can understand it, it must be "oversimplified". He doesn't realize that being able to make complicated concepts understandable to anyone is the hallmark of a good teacher. (Well, he probably just wants it to be inaccessible so he can feel superior.)

    It's great the IMF is realizing that neoliberalism is bad. They've been making noises for a little while about how some of the projects they've pushed in third-world countries have had unexpected, disastrous, secondary effects; and since Picketty's book came out, have made statements about how too much inequality is bad and can lead to social unrest. However, I don't expect the powerful True Believers to change their tune any time soon. There are too many benefits in it for them.