Every time I calm down, there’s another reminder of the damage that neoliberalism has wrought. Once again, rather than reading about this in the New York Times or Washington Post, this has to be pointed out and emphasized by William Black, at Naked Capitalism. William Black is an associate professor of economics and law at the University of Missouri–Kansas City. He was the executive director of the Institute for Fraud Prevention from 2005-2007.
“We have just seen the three most destructive epidemics of financial fraud in history cause a Great Recession that cost $21 trillion in lost U.S. GDP and over 10 million jobs – and both numbers are far larger in Europe. In addition we have the world’s largest banks and bankers leading the two largest financial frauds in history – the Libor and FX conspiracies – plus banks helping fund one of the most violent drugs cartels (Sinaloa) in the world, genocide in Sudan, and (the U.S. government believes) Iran’s development of nuclear weapons. They also manipulated commodity prices, conspired with the ultra-wealthy to evade taxes, rigged municipal bond bids throughout the U.S., and led the massive sale of grossly inappropriate financial products to millions of people in the UK.”
Both of our flagship newspapers–the New York Times and Washington Post–have become infected with neoliberal economic orthodoxy. The Post whines about Elizabeth Warren being mean to President Obama’s nominee to be undersecretary of the Treasury. And, the Times acts as a apologist for finance, and downplays the fact that not one banker has gone to prison as a result of their widespread crime spree.
“The biggest banks—JPMorgan Chase, Bank of America, and Citigroup—have all recently paid multibillion-dollar fines stemming from the mortgage fraud perpetrated in the lead-up to and fallout from the crisis, but no top executives have gone to jail. Moreover, those companies copped to civil charges, but have not faced criminal prosecution. This marks a sharp departure from past banking scandals, such as the savings and loan crisis, where more than 1,000 bankers were convicted by the Justice Department through the late 1980s and early 1990s.”
I firmly believe that these epidemics of financial fraud would have been impossible without the tireless work performed by the neoliberals.
To better understand neoliberalism it’s useful to turn to one of the best books written about this ideology. In Never Let a Serious Crisis Go To Waste, Philip Mirowski, agues that neoliberalism is much more complicated than just a way to transfer wealth to the rich and powerful. Personally, I think that was the plan all along, and they succeeded beyond their wildest dreams. Anyway, Mirowski is correct when he describes neoliberalism as infinitely complicated. He describes it as the Neoliberal Thought Collective, with multiple strands of the collective stretching throughout academia, government and business. It’s safe to say that neoliberalism has insinuated itself to a large degree in our everyday life. How they did it is quite fascinating.
One of the biggest intellectual scams that neoliberals pulled off was to equate corporate and financial oligopolies with free enterprise, thereby making them respectable and giving them a sheen of righteous morality, almost like a fictional scene out of Atlas Shrugged. Another neoliberal intellectual misdirection was promulgating the notion of desiring a small government, and a laissez-faire economic system, when the opposite was true. If you remember nothing else, remember that neoliberals require a strong state, they control, to implement their version of a “free market.” Chile under Pinochet is an instructive illustration of this requirement for a strong state to carry out neoliberal market policies.
Neoliberal intellectuals also laid the groundwork for the enormous privatization of public infrastructure that allowed corporate and financial oligopolies to set up toll booths on our economy and extract rent, all in the name of market efficiency.
Neoliberals were able to largely succeed, I believe, because opposition by the political party that that had traditionally represented labor has vanished and what remains is theatre. Or, perhaps sports is a better metaphor. The Democratic Party plays the role of the Washington Generals, whose mission was to regularly lose to the Harlem Globetrotters, played by the Republicans. Or, maybe this crude sports metaphor is wholly inadequate. Maybe the Democrats are actually performing their historical role as a crucial component of the Ratchet Effect.
Whatever the reason, the economy the neoliberals constructed is the economy we have. Corporate and financial oligopolies, owned and controlled by the wealthy, supported and feted by the state, with the whole thing described reverently in the media as free enterprise.
If you’re following this, perhaps you can comprehend my rage.
What can we do?
Don’t fight on their terms, use their strength against them. Too many progressives seem incapable of seeing the ground changing under their feet, and believe the neoliberal propaganda about laissez-faire. Instead, we need to welcome markets, but with a caveat: a strong government, controlled by us, that promotes a different type of market system, one where all can participate.
In examining why our present market based system is so biased, we must turn to theories of political/economy, specifically: rent seeking, monopolies and oligopolies. Look around you in America today. What do we have a far as the eye can see? Rent gauging, monopolies and oligopolies. Examples are everywhere–Goldman Sachs, Comcast, Verizon, Wal-Mart, etc.
Many of these oligopolies are the result of corporate seizure of the commons. Progressives would do well to understand the infrastructure-capital concepts of economist, Simon Patten.
Patten believed in a “…fourth factor of production.” Instead of rentiers making a profit by charging access fees and user fees, the return to public investment should take the form of reducing the economy’s overall price structure…rentier rights are legalized tollbooths to extract revenue that rightly should belong in the public sector.”
Getting this version of political/economy will not be easy, to say the least. The corporations and banks that benefit from our present system are not going to go peacefully into the good night.
Next, we’ll talk about the really big impediment to my utopian plan–neoconservatism.
*In memory of Alexander Cockburn