I’ve always liked this formulation of neoliberalism because of its succinctness, but it’s useful to tease out the implications. Because markets describes how neoliberalism organizes all human activity through the competition of a market system that’s directed by a neoliberal state. Obamacare is a great example of this dynamic. Go die is the ultimate fate of the losers who cannot compete. You know the teachers, nurses, small farmers, laid-off manufacturing workers and demonized government employees. The savage inequality that’s developed under neoliberalism is not a bug but a feature.

Instead of a collective and cooperative vision of humanity neoliberalism is all about individualism and selfishness. Margaret Thatcher articulated the essence of its value system–“there is no society, only individuals and their families”.

Neoliberalism mandates endless competition. The best person wins (meritocracy)–as opposed to the logic that founded human societies–cooperation, the ability to work collectively in a social and political setting. To organize this competition neoliberalism is predicated on the worship of markets. All forms of human activities, governance included, are to be directed by markets. Going further, neoliberalism has financialized the US economy, originally as a way to reinvigorate capitalism but now as a means unto itself.

I originally meant to focus on the domestic effects of neoliberalism but it occurred to me that this distinction might also apply to the American empire as well, where the worship of markets and financialization have hollowed out the manufacturing base and left the supply-chain dangerously exposed. I’m pretty sure the mandarins ensconced in the national security state never envisioned such an outcome, although it makes sense that a system of governance–neoliberalism–with its laser like focus on the financial short term, would get itself in such a predicament.

Perhaps this outcome is true of all empires, but anyway, here we are.

Washington cannot yield on dollar primacy, the ultimate signifier for American power, and now decline. Meanwhile, the U.S. government is hostage to its financial hegemony in a way that is rarely fully understood. To wit, the US maintains its empire through financial means–the US dollar as the world’s reserve currency. Dollars that the US Treasury allows banks to print at will.

The U.S. created its hegemony through demanding that oil (and other commodities) be priced in dollars, and by facilitating a frenetic financialization of asset markets in the U.S. It is this demand for dollars which alone has allowed the U.S. to fund its government deficit, and its defense budget for nothing. This financial juggernaut has become the chief locus of US power projection. Indeed, after the several western debacles centered on regime-change by military shock-and-awe, even the W. Bush coterie of neo-cons, by 2006, had conceded that a weaponized financial system was the only means to ‘secure the American Empire’.

Unfortunately for the neocons, a financial economy is no match for an economy that produces things–like weapons and ammunition. The US/NATO proxy war against Russia in Ukraine has demonstrated to the rest of the world the evident weakness of the hyper-financialized western model desperately searching the cupboard for munitions while Russian production continues unabated. Even worse, the blowback from the US financial and kinetic proxy war against Russia  has precipitated a strong move away from the dollar and US debt.

Don’t take my word for it. The RAND Corporation, a highly influential elite national security think tank funded directly by the Pentagon, has published a landmark report stating that prolonging the proxy war is actively harming the US and its allies and warning Washington that it should avoid “a protracted conflict” in Ukraine. The report starts by stating that the fighting represents “the most significant interstate conflict in decades, and its evolution will have major consequences” for Washington, which includes US “interests” being actively harmed.

Whoops. 

I began this post with the idea of provoking thoughts on the sadistic system of neoliberalism, following Lambert at Naked Capitalism’s maxim–“Because markets. Go die”. But it’s becoming blindingly clear that the American empire is also headed for the boneyard. The geniuses that run US foreign policy bet it all on black, in that our weaponized financial system was the ultimate doomsday weapon that would crush all in its path. Except, that’s not how it turned out. It seems that this financial colossus has feet of clay.

There’s a historical vignette that’s pertinent to our story. In the run up to WWI British strategists were concerned about England’s economic performance in the coming conflict with Germany. Heterodox economist Michael Hudson says that reason was that the Germans operated an industrial economy that was productive while Britain maintained a financial economy that was largely extractive. Ultimately Britain and the Entente powers prevailed thanks to the abundant resources of England’s colonial empire and the timely intervention of the US military and banks.

It seems that industrial warfare never went anywhere and that a nations manufacturing ability is the key component, something US planners should have realized. War fighting is a messy, complicated, resource intensive activity. The conflict in Ukraine is exposing the limitations of the vaunted US military with its trillion dollar budget, but it’s also exposing the Wall Street/Washington financial wonder-weapon in the process.