Abstract
Analyzing
aspects of the rightwing populist tide arising largely in reaction to the
pluralistic-diversity model of neoliberalism, this essay examines the evolving
social contract that normalizes systemic exploitation and repression in the
name of capitalist growth. Amid incessant indoctrination by the media
representing big capital, people try to make sense of whether their interests
are best served under the pluralist-diversity model of globalist neoliberalism
with a shrinking social welfare safety net, or an authoritarian-economic nationalist
model promising salvation through the use of an iron hand against domestic and
foreign enemies.
Socioeconomic
polarization under the neoliberal social contract has laid the groundwork for
political polarization clearly evident not just in President Donald Trump’s
America and Prime Minister Narendra Modi’s India representing a rightwing
populist neoliberal ideology, but France’s President Emmanuel Macron’s La
République En Marche that espouses a pluralist–diversity-environmentalist
model aiming at the same neoliberal goals as the populists. Whether under the
pluralist or the authoritarian model, neoliberalism represents what Barrington
Moore described in Social Origins of Dictatorship and Democracy (1966) a
capitalist reactionary route that Italy, Japan, and Germany followed under
totalitarian regimes in the interwar era to protect the capitalist class after
the crisis that wars of imperialism (1870-1914) and WWI had created in core
capitalist countries.
Although
the world is much more thoroughly integrated under capitalism today than it was
a century ago, the same marked absence of a revolutionary trend as there was in
the interwar era is evident in our era. This accounts for the neoliberal revolution
from above culminating in variations of authoritarian regimes throughout the
world. This does not only signal a crisis in capitalism but social
discontinuity that will precipitate sociopolitical instability as
contradictions within the political economy foster polarization across all
sectors of society.
Historical
Introduction
Most
people today have no reason
to be familiar with the term “social contract” any more than they are familiar
with neoliberalism that inordinately influences public policy on a world scale.
For many analysts contemplating the relationship of the individual to organized
society, the social contract is about the degree to which government advances a
set of social and economic policies articulated by an ideology designed to
benefit certain institutions and social groups, while safeguarding sovereignty
in the name of the governed. The problem arises when the governed no longer
view the social contract as legitimate, a point that John Locke addressed as
this was a key issue in 17th century England right before the
Glorious Revolution.
The social
contract has its origins in the transition from subsistence agriculture of the
feudal-manorial economy to commercial agriculture and long-distance trade under
capitalism in the 15th and 16th century. With the advent
of the Scientific Revolution in the 17th century and the
Enlightenment in the 18th century coinciding with England’s first
industrial revolution accounted for more rapid evolution of the division of
labor, European intellectuals challenged the old social order based on
birth-right privilege of the aristocracy representing the agrarian-based
economy of the past. Changes taking place in the economy and social structure
gave rise to bourgeois social contract theories that articulated a core role in
the state for the merchant-banking class, especially in northwest Europe where
mercantile capitalism consolidated.
As the
ideological force of the English Glorious Revolution (1689), John Locke, the
father of Western Liberalism, argued for a regime that reflected the emerging
bourgeoisie inclusion into the political mainstream to reflect the commensurate
role in the economy. Interestingly, Locke provided a philosophical
justification for overthrowing the government when it acted against the
interests of its citizens, thus influencing both the American War of
Independence and the French Revolution. Building on Locke’s liberal philosophy
and views on the tyranny of absolutism, Jean-Jacques Rousseau wrote in The
Social Contract (1762) that: “Man
is born free, but everywhere in chains.” This statement reflected the views
of many bourgeois thinkers who believed that modernization of society is not possible
in the absence of a social contract that takes into account natural rights, an
approach to government that would mirror a merit based criteria.
Departing
from Locke’s liberalism that had property ownership and individualism at the
core of his political thought, in the Discourse on Inequality, (1754)
Rousseau argued that property appropriation rests at the root of
institutionalized inequality and oppression of individuals against the
community. The role of the state plays a catalytic role for it as an “association which will defend the person
and goods of each member with the collective force of all.” The basis of
social contract theory accounts for the sovereign power’s legitimacy and
justice, thus resulting in public acceptance. (Jason Neidleman, "The Social Contract Theory in a Global
Context" http://www.e-ir.info/2012/10/09/the-social-contract-theory-in-a-global-context/; C. B. Macpherson. The Political Theory of
Possessive Individualism, 1962)
Rooted in
the ascendancy of the European bourgeoisie, social contract theory has evolved
in the last three centuries, especially after the Revolutions of 1848 and the
rise of the working class as a sociopolitical force demanding inclusion rather
than marginalization and exploitation legalized through public policy that the
representatives of capitalism legislated. The cooptation of the working class
into bourgeois political parties as a popular base in the age of mass politics
from the mid-19th century until the present has obfuscated the
reality that social contract under varieties of parliamentary regimes continued
to represent capital.
The
creation of large enterprises gave rise not only to an organized labor
movement, but to a larger bureaucratic regulatory state with agencies intended
to help stabilize and grow capitalism while keeping the working class loyal to
the social contract. Crisis in public confidence resulted not only from
economic recessions and depressions built into the economy, but the
contradictions capitalism was fostering in society as the benefits in advances
in industry, science and technology accrued to the wealthy while the social
structure remained hierarchical.
Ever since
1947 when the ideological father of neoliberalism Friedrich von Hayek called a
conference in Mont Pelerin to address how the new ideology would replace
Keynesianism, neoliberals have been promising to address these contradictions,
insisting that eliminating the social welfare state and allowing complete
market domination that would result in society’s modernization and would filter
down to all social classes and nations both developed and developing. Such
thinking is rooted in the modernization theory that emerged after WWII when the
US took advantage of its preeminent global power to impose a transformation
model on much of the non-Communist world. Cold War liberal economist Walt
Rostow articulated the modernization model of development in his work entitled The
Stages of Economic Growth: A Non-Communist Manifesto, 1960. By the
1970s, neoliberals adapted Rostow’s modernization theory as their bible and the
core of the social contract. (Evans Rubara, “Uneven
Development: Understanding the Roots of Inequality”
The
challenge for the political class has always been and remains to mobilize a
popular base that would afford legitimacy to the social contract. The issue for
mainstream political parties is not whether there is a systemic problem with
the social contract intended to serve the capitalist class, but the degree to
which the masses can be co-opted through various methods to support the status
quo. “A generation ago, the country’s
social contract was premised on higher wages and reliable benefits, provided
chiefly by employers. In recent decades, we’ve moved to a system where low
wages are supposed to be made bearable by low consumer prices and a hodgepodge
of government assistance programs. But as dissatisfaction with this arrangement
has grown, it is time to look back at how we got here and imagine what the next
stage of the social contract might be.”
Considering
that Keynesianism and neoliberalism operate under the same social structure and
differ only on how best to achieve capital formation while retaining
sociopolitical conformity, the article above published in The Atlantic illustrates
how analysts/commentators easily misinterpret nuances within a social contract
for the covenant’s macro goals. A similar view as that expressed in The
Atlantic is also reflected in the New America Foundation’s
publications, identifying specific aspects of Arthur Schlesinger’s Cold War
militarist policies enmeshed with social welfare Keynesianism as parts of the
evolving social contract.
Identifying
the social contract with a specific set of policies under different administrations
evolving to reflect the nuances of political class and economic elites, some
analysts contend that there is a European Union-wide social contract to which
nationally-based social contracts must subordinate their sovereignty. This
model has evolved to accommodate neoliberal globalism through regional trade
blocs on the basis of a ‘patron-client’ integration relationship between core
and periphery countries.
A European
export and integral part of cultural hegemony in the non-Western world, the liberal-bourgeois
social contract for the vast majority of Africans has failed to deliver on the
promise of socioeconomic development, social justice and national sovereignty
since independence from colonial rule. Just as in Africa, the Asian view of the
social contract is that it entails a liberal model of government operating
within the capitalist system rather than taking into account social justice
above all else. Embracing pluralism and diversity while shedding aspects of
authoritarian capitalism associated with cronyism and the clientist state, the
view of the Asian social contract is to subordinate society to neoliberal
global integration and work within the framework of Western-established
institutions. In each country, traditions governing social and political
relationships underlie the neoliberal model. (Sanya Osha, The Social Contract in Africa,
2014;
Despite far
reaching implications for society and despite the political and business class
keen awareness of neoliberalism, most people around the world are almost as
perplexed by the term neoliberalism as they are with social contract theory
that is outside the public debate confined to the domain of political
philosophy. Many associate neoliberalism with Ronald Reagan supporter Milton
Friedman and the ‘Chicago School’, rarely mentioning the political dimension of
the economic philosophy and its far-reaching implications for all segments of
society. In an article entitled “Neoliberalism
– the ideology at the root of all our problems” The Guardian columnist
George Monbiot raised a few basic questions about the degree to which the
public is misinformed when it comes to the neoliberal social contract under
which society operates.
“Neoliberalism: do you know what it is? Its
anonymity is both a symptom and cause of its power. It has played a major role
in a remarkable variety of crises: the financial meltdown of 2007-2008, 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?
Advocates
of neoliberalism, both from the pluralist-social welfare wing and the rightwing populist camp, have succeeded in
institutionalizing the new social contract which has transformed the historically
classical notion of individual freedom based on the Enlightenment concept of
natural rights into freedom of capitalist hegemony over the state and society.
Whether operating under the political/ideological umbrella of
pluralism-environmentalism in Western nations, combined with some version of a
Keynesian social welfare pluralist model, with rightwing populism or
authoritarianism in one-party state, political and corporate elites advancing
the neoliberal model share the same goal with regard to capital formation and
mainstream institutions.
Weakening
the social welfare corporatist state model by reaching political consensus
among mainstream political parties by the late 1980s-early 1990s, whether
operating under a centrist-pluralist or conservative party, neoliberals have
been using the combination of massive deregulation with the state providing a
bailout mechanism when crisis hits; fiscal policy that transfers income from
workers and the middle class – raising the public debt to transfer wealth from
the bottom 90% to the wealthiest 10% -; providing corporate subsidies and
bailouts; and privatizing public projects and services at an immense cost to
the declining living standards for the middle class and workers.
As much in
the US as in other developed nations beginning in the 1980s, the neoliberal
state has become status quo by intentionally weakening the social welfare state
and redefining the social contract throughout the world. Working with large
banks and multilateral institutions such as the International Monetary Fund
(IMF) and World Bank that use loans as leverage to impose neoliberal policies
around the world in debtor nations desperate to raise capital for the state and
attract direct foreign investment, the advanced capitalist countries impose the
neoliberal social contract on the world.
As
reflected in the integrated global economy, the neoliberal model was imbedded
in IMF stabilization and World Bank development loans since the late 1940s.
After the energy crisis of the mid-1970s and the revolutions in Iran and
Nicaragua in 1979, international developments that took place amid US concerns
about the economy under strain from rising balance payments deficits that could
not accommodate both ‘military Keynesianism’ (deficit spending on defense as a
means of boosting the economy) and the social welfare system, neoliberalism
under the corporate welfare state emerged as the best means to continue
strengthening capitalism. (J. M. Cypher, “From
Military Keynesianism to Global-Neoliberal Militarism”, Monthly
Review Vol. 59, No. 2, 2007; Jason Hickel, A Short History ofNeoliberalism,
Everything
from government agencies whose role is strengthening capital, to public schools
and hospitals emulating the market-based management model and treating patients
and students as customers, the neoliberal goal is comprehensive market
domination of society. Advocates of the neoliberal social contract no longer
conceal their goals behind rhetoric about liberal-democratic ideals of individual
freedom and the state as an arbiter to harmonize the interests of social
classes. The market unequivocally imposes its hegemony not just over the state
but on all institutions, subordinating peoples’ lives to market forces and
equating those forces with democracy and national sovereignty. In pursuit of
consolidating the neoliberal model on a world scale, the advocates of this
ideology subordinate popular sovereignty and popular consent from which
legitimacy of the state emanates to capital. http://www.rhizomes.net/issue10/introren.htm
As an
integral part of the social environment and hegemonic culture reflecting the
hierarchical class structure and values based on marginalization, the neoliberal
social contract has become institutionalized in varying degrees reflecting the
more integrative nature of capitalism after the fall of the Communist bloc
coinciding with China’s increased global economic integration. Emboldened that
there was no competing ideology from any government challenging capitalism,
neoliberals aggressively pursued globalization under the deregulation-corporate
welfare anti-labor model.
Some
countries opted for mixed policies with a dose of quasi-statist policies as in
the case of China. Others retained many aspects of the social welfare state as
in the case of EU members, while some pursue authoritarian capitalism within a
pluralistic model. Still other nations in the Middle East, Africa, and Asia
where pluralism and multi-party traditions are not very strong, neoliberal
policies are tailored to clientist politics and crony capitalism. In all cases,
‘market omnipotence theory’ is the catalyst under the umbrella of the
neoliberal social contract.
Ideology, the Neoliberal State, and the Social
Contract
Just as religion was universally intertwined with identity, projection of
self-image in the community and the value system in the Age of Faith
(500-1500), secular ideology in the modern world fulfills somewhat a similar
goal. Although neoliberalism has been criticized as a secular religion
precisely because of its dogmatism regarding market fundamentalism, especially
after 2013 when Pope Francis dismissed it as idolatry of money that attempts to
gloss over abject socioeconomic inequality on a world scale, capitalists and
the political class around the world have embraced some aspects if not
wholeheartedly neoliberal ideology. https://economicsociology.org/2014/12/25/pope-francis-against-neoliberalism-finance-capitalism-consumerism-and-inequality/
In the early 21st century
arguments equating the rich with societal progress and vilifying the poor as
social stigma indicative of individual failure are no different than arguments
raised by apologists of capitalism in the early 19th century when
the British Parliament was debating how to punish the masses of poor that the
industrial revolution had created. In defending tax cuts to the wealthy, Republican
Senator Chuck Grassley stated: “I think
not having the estate tax
recognizes the people that are investing — as opposed to those that are just
spending every darn penny they have, whether it’s on booze or women or movies.”
https://www.huffingtonpost.com/entry/grassley-estate-taxes-booze-women_us_5a247d89e4b03c44072e5a04; The US senator’s argument could easily be
heard in early 19th century England. Blaming the poor for structural
poverty which capitalism causes has become widespread since the early 1980s.
This is because of government efforts to dismantle the welfare state as a
social safety net and transfer resources for tax cuts to the wealthiest
individuals. https://www.globalresearch.ca/blaming-the-poor-for-poverty/535675
Rooted in classical liberal ideology,
neoliberalism rests on laissez-faire and social Darwinist principles that
affirm societal progress as defined by materialist self-interest. Because
private financial gain is the sole measure of success and virtue, neoliberals
demand that the state and international organizations must remove impediments
to capital accumulation nationally and internationally no matter the
consequences to the non-propertied classes. Aiming for more than mere
mechanical compliance, the goal of the ideology is to create the illusion of
the neoliberal self that lives, breathes, and actualizes neoliberal myths in
every aspect of life from a person as a worker to consumer and citizen.
Jim Mcguigan argues that “the transition from organised capitalism to
neoliberal hegemony over the recent period has brought about a corresponding
transformation in subjectivity. … Leading celebrities, most notably high-tech
entrepreneurs, for instance, operate in the popular imagination as models of
achievement for the aspiring young. They are seldom emulated in real life,
however, even unrealistically so. Still, their famed lifestyles and heavily
publicised opinions provide guidelines to appropriate conduct in a ruthlessly
competitive and unequal world.” (Jim McGuigan: ‘The Neoliberal Self’, Culture
Unbound, Volume 6, 2014; http://www.cultureunbound.ep.liu.se/v6/a13/cu14v6a13.pdf
By offering the illusion of integration to those that the social structure
has marginalized while trying to indoctrinate the masses that the corporate
state is salvation and the welfare state is the enemy to default all of
society’s problems, the neoliberal ideology has captured the imagination of
many in the middle class and even some in the working class not just in the
West but around the world and especially in former Communist bloc countries
where people entertained an idealized version of bourgeois liberal society. (S.
Gill, “Pessimism of Intelligence,
Optimism of Will” in Perspectives on Gramsci, ed. by
Joseph Francene 2009)
Similar to liberalism in so far as it offers something for which to hope,
neoliberalism is a departure when it decries the state as an obstacle to
capitalist growth not only because of regulatory mechanisms and as an arbiter in
society that must placate the masses with social programs, but even as a
centralized entity determining monetary and fiscal policy. Proponents of
neoliberalism demand turning back the clock to the ideology that prevailed
among capitalists and their political supporters at the dawn of the Industrial
Revolution when there were no state mechanisms to regulate labor conditions,
mining operations and the environment, food and drugs, etc. From a dogmatic
market fundamentalist perspective, the market transcends national borders and
supersedes the state, thus the principal form of governance revolves around
furthering capital accumulation.
Not only is there an absence of a social conscience not so different than
what prevailed in the nascent phase of industrial capitalism, but there is disdain
of social responsibility on the part of capital beyond the realm of tax-deductible
charity donations and voluntarism. More significant, neoliberals believe that
capital is entitled to appropriate whatever possible from society because the
underlying assumption of corporate welfare entitlement is built into the
neoliberal ideology that identifies the national interest with capital and
labor as the enemy of capital accumulation. (K. Farnsworth, Social
vs. Corporate Welfare, 2012)
The irony in all of this is that in 2008 the world experienced the largest
and deepest recession since the 1930s precisely because of neoliberal policies.
However, its advocates insisted that the recession was caused we did not have
enough deregulation, privatization, corporate welfare and low taxes on capital rather
than going too far with such an extreme ideology whose legal and illegal
practices that led to the global recession. Even more ironic neoliberal
ideology blames the state - central banks, legislative branch and regulatory
agencies - rather than the economic system for the cyclical crisis. https://cgd.leeds.ac.uk/events/2008-global-financial-crisis-in-a-long-term-perspective-the-failure-of-neo-liberalism-and-the-future-of-capitalism-2/
Because the state puts the interests of a tiny percentage of the population
above the rest of society, it is a necessary structure only in so far as it
limits its role to promoting capital formation by using any means to achieve
the goal. Whether under a pluralistic-diversity political model or an
authoritarian one, neoliberalism is anti-democratic because as Riad Azar points
out, “The common denominator is the empowering of elites
over the masses with the assistance of international forces through military
action or financial coercion—a globalized dialectic of ruling classes.”
From conservative and liberal to self-described Socialist, political
parties around the world have moved ideologically farther to the right in order
to accommodate neoliberalism as part of their platform. The challenge of the
political class is to keep people loyal to the neoliberal ideology; a challenge
that necessarily forces political parties to be eclectic in choosing aspects of
other ideological camps that appeal to voters. While embracing corporate
welfare, decrying social welfare is among the most glaring neoliberal
contradiction of an ideology that ostensibly celebrates non-state intervention
in the private sector. This contradiction alone forces neoliberal politicians
of all stripes and the media to engage in mass distraction and to use everything
from identity politics ideologies to cult of personality, and culture wars and
‘clash of civilization’ theories. https://www.telesurtv.net/english/opinion/How-the-Democrats-Became-The-Party-of-Neoliberalism-20141031-0002.html; https://www.opendemocracy.net/uk/paul-emery/why-on-earth-would-socialists-support-neoliberal-undemocratic-eu
To justify why self-proclaimed socialist and democratic parties have
embraced neoliberalism, many academics have provided a wide range of theories
which have in fact helped solidify the neoliberal ideology into the political
mainstream. Among the countless people swept up by the enthusiasm of the
Communist bloc’s fall and China’s integration into the world capitalist
economy, Daniel Bell, The End of Ideology (2000), argued
that the world returned to old religious and ethnic conflicts around which
ideologies of the new century were molded.
Encouraged by China’s integration into the global capitalist system, in
September 2006 Bell wrote: “It's the end of ideology in
China. Not the end of all ideology, but the end of Marxist ideology. China has
many social problems, but the government and its people will deal with them in
pragmatic ways, without being overly constrained by ideological boundaries. I
still think there's a need for a moral foundation for political rule in China -
some sort of guiding ideal for the future - but it won't come from Karl Marx.” https://prezi.com/kha1ketnfjtd/ideology-in-everyday-life/
Such hasty pronouncements and others in works like Francis Fukuyama’s The
End of History expressed the Western bourgeois sense of relief of an
integrated world under the Western-dominated neoliberal ideology that would
somehow magically solve problems the Cold War had created. While Bell, Fukuyama
and others celebrated the triumphant era of neoliberal ideology, they hardly
dealt with the realities that ideology in peoples’ lives emanates from
mainstream institutions manifesting irreconcilable contradictions. A product
molded by the hegemonic political culture, neoliberal ideology has been a
factor in keeping the majority in conformity while a small minority is
constantly seeking outlets of social resistance, some within the neoliberal rightwing
political mold. https://www.theguardian.com/books/2014/mar/21/bring-back-ideology-fukuyama-end-history-25-years-on
As catalyst to mobilize the masses, nationalism remains a strong aspect of
ideological indoctrination that rightwing populist neoliberals have used
blaming immigrants, Muslims, women, gays, environmentalists, and minorities for
structural problems society confronts resulting from the political economy. Although there are different political approaches about how best to
achieve neoliberal goals, ideological indoctrination has always played an
essential role in keeping people loyal to the social contract. However, the
contradiction in neoliberal ideology is the need for a borderless world and the
triumph of capital over the nation-state while state policies harmonize
disparate capitalist interests within the nation-state and beyond it. If
neoliberal ideology tosses aside nationalism then it deprives itself of a
mechanism to mobilize the masses behind it. https://left-flank.org/2011/01/16/the-curious-marriage-of-neoliberalism-and-nationalism/
Arguing that the ‘Ideological State Apparatuses’ (ISA)
such as religious and educational institutions among others in the private
sector perpetuate the ideology of the status quo, Louis Pierre Althusser
captured the essence of state mechanisms to mobilize the masses. However,
ideology is by no means the sole driving force in keeping people loyal to the
social contract. While peoples’ material concerns often dictate their
ideological orientation, it would be hasty to dismiss the role of the media
along with hegemonic cultural influences deeply ingrained into society shaping
peoples’ worldview and keeping them docile.
Building on Althusser’s theory of how the state
maintains the status quo, Goran Therborn (Ideology of Power and the Power of Ideology,
1999) argues that the neoliberal state uses ideological domination as a
mechanism to keep people compliant. Combined with the state’s repressive
mechanisms – police and armed forces – the ideological apparatus engenders
conformity wherein exploitation and repression operate within the boundaries
that the state defines as ‘legal’, thus ‘normal’ for society. A desirable goal
of regimes ranging from parliamentary to Mussolini’s Fascist Italy (1922-1943)
and clerical Fascism under Antonio de Oliveira Salazar’s Portugal (1932-1968),
legalized repressive mechanisms have become an integral part of neoliberal
ideological domination.
The unchecked role of neoliberal capitalism in every aspect of the
social fabric runs the risk of at the very least creating massive social,
economic and political upheaval as was the case with the great recession of
2008 preceded by two decades of neoliberal capitalism taking precedence over
the welfare regulatory state whose role is to secure and/or retain equilibrium
in global markets. In The Great Transformation,
(1944)", Karl Polanyi argued that: “To
allow the market mechanism to be sole director of the fate of human beings and
their natural environment...would result in the demolition of society."
Because Polanyi lived through the Great Depression era of the New Deal
and the rise and fall of the Axis Powers, he was optimistic that a return to
the 1920s would not take root after WWII. Polanyi accepted Hegel’s view of the
social contract that the state preserves society by safeguarding general or
universal interests against particular ones. However, we have been witnessing
the kind of demolition of society Polanyi feared because of unchecked market
forces. This is in part because the demise of the Communist bloc and the rise
of China as a major economic power emboldened advocates of neoliberal ideology.
With the realization of US long road to decline at the end of the
Vietnam War, neoliberal elites prevailed that the crisis of American leadership
could be met with the elimination of Keynesian ideology and the adoption of
neoliberalism as tested by the Chicago School in Chile under the US-backed
dictatorship of Augusto Pinochet from 1973 to 1990. That the neoliberal
ideology became an experiment tested in a US-backed military dictatorship in
South America is itself revealing about what the nature of the social contract
once implemented even in pluralistic societies where there was popular and
political support for Keynesianism. Characteristic of a developing nation like
Chile was external dependence and a weak state structure, thus easily
manipulated by domestic and foreign capital interested in deregulation and
further weakening of the public sector as the core of the social contract.
“The withering away of
national states and the wholesale privatization of state-owned enterprises and
state-administered services transferred highly profitable monopolies to
capitalists, and guaranteed the repayment of the foreign debt-contracted, as in
Argentina, Brazil, Chile, and Uruguay-by irresponsible, corrupt, and de facto
military rulers. Neoliberalism supplied the general justification for the
transfer of public assets and state-owned enterprises, paid for with public
savings, even in areas considered "taboo" and untouchable until a few
years ago, such as electricity, aviation, oil, or telecommunications. (Atilio A. Boron, “Democracy or
Neoliberalism?” http://bostonreview.net/archives/BR21.5/boron.html
Advocating
the systematic dismantling of the social welfare state in the name of upholding
the virtues of individualism while strengthening of corporate welfare
capitalism in the name of economic growth on global scale, advocates of
neoliberal ideology were emboldened by the absence of a competing ideology
after the fall of the Soviet bloc and China’s capitalist integration. As the
income gap widened and globalization resulted in surplus labor force amid
downward pressure on wages, a segment of the social and political elites
embraced a rightwing populist ideology as a means of achieving the neoliberal
goals in cases where the pluralist ideological model was not working. The
failure of neoliberal policies led some political and business elites to
embrace rightwing populism in order to save neoliberalism that had lost support
among a segment of society because of its association with centrist and
reformist cultural-diversity pluralist neoliberals. This trend continues to
gain momentum exposing the similarities between neoliberalism and Fascism. (David
Zamora, “When Exclusion Replaces
Exploitation: The Condition of the Surplus-Population under Neoliberalism” http://nonsite.org/feature/when-exclusion-replaces-exploitation.
Neoliberalism and
Fascism
a. The role of the
state
Unprecedented for a former president, on 10 December
2017 Barak Obama warned Americans not to follow a Nazi path. A clear reference
to president Trump and the Republican Party leading America in that direction
with rhetoric and policies that encourage ‘culture war’ (kulturkampf – struggle
between varieties of rightwingers from evangelicals to neo-Nazis against
secular liberals), Obama made reference to socioeconomic
polarization at the root of political polarization.
“The combination
of economic disruption, cultural disruption ― nothing feels solid to people ―
that’s a recipe for people wanting to find security somewhere. And sadly,
there’s something in all of us that looks for simple answers when we’re
agitated and insecure. The narrative that America at its best has stood for,
the narrative of pluralism and tolerance and democracy and rule of law, human
rights and freedom of the press and freedom of religion, that narrative, I
think, is actually the more powerful narrative. The majority of people around
the world aspire to that narrative, which is the reason people still want to
come here." https://www.huffingtonpost.com/entry/obama-warns-americans-against-following-in-the-path-of-nazi
germany_us_5a2c032ce4b0a290f0512487
Warning about the road to Nazism, Obama drew
distinctions between the Democratic Party’s brand of pluralist neoliberalism
and Trump’s rightwing populist model. Naturally, Obama did not mention that
both models seek the same goals, or that policies for which he and his
predecessor Bill Clinton pursued drove a segment of the population toward the
authoritarian neoliberal model that offers the illusion of realizing the
American Dream. Distancing themselves from neo-Fascists, mainstream European
political leaders embracing the pluralist model under neoliberalism have been
as condemnatory as Obama of rightwing populism’s pursuit of ‘culture war’ as a
precursor to Fascism.
Accusing Trump of emboldening varieties of
neo-Fascists not just in the US and EU but around the globe, European
neoliberal pluralists ignored both the deep roots of Fascism in Europe and
their own policies contributing to the rise of neo-Fascism. Just as with Obama
and his fellow Democrats, European neoliberal pluralists draw a very sharp
distinction between their version of neoliberalism and rightwing populism that
either Trump or Hungary’s Viktor Orban pursue. Neoliberal pluralists argue that
rightwing populists undercut globalist integration principles by stressing
economic nationalism although it was right nationalists Margaret Thatcher and
Ronald Reagan that engaged in wholesale implantation of neoliberal policies. https://bpr.berkeley.edu/2017/02/28/the-myths-of-far-right-populism-orbans-fence-and-trumps-wall/
Rightwing populism under Ronald Reagan as the first president to implement
neoliberal policies emerged as a reaction to the prospect that the Western-based
core of capitalism was weakening as a result of a multi-polar world economy. Whereas
in the middle of the 20th century the US enjoyed balance of payments
surpluses and was a net creditor with the dollar as the world’s strongest
reserve currency and the world’s strongest manufacturing sector, in 2017 the US
is among the earth’s largest debtor nations with chronic balance of payments
deficits, a weak dollar with a bleak future and an economy based more on
parasitic financial speculation and massive defense-related spending and less
on productive sectors that are far more profitable in Asia and developing
nations with low labor costs. (Jon Kofas, Independence from America: Global
Integration and Inequality, 2005, 40-54)
Exerting enormous influence by exporting its neoliberal ideological,
political, economic and cultural influence throughout the world, the US-imposed
transformation model has resulted in economic hardships and political and
social instability in Latin America, Africa and Asia. Institutionalizing neoliberalism
under rightwing populism and using Trump as the pretext to do so, the US is
leading nations around the world to move closer to neo-Fascism, thus exposing
neoliberalism as totalitarian. The recognition by the political class and
business class that over-accumulation is only possible by continued downward wage
pressure has been a key reason that a segment of the population not just in the
US but across EU has supported populist rightwing and/or neo-fascists.
Rejecting the claim of any similarities between neoliberalism and Fascism,
neoliberal apologists take pride that their apparent goal is to weaken the
state, by which they mean the Keynesian welfare state, not the ‘military
Keynesian’ and corporate welfare state. By contrast, Fascists advocated a
powerful state – everything within the
state, nothing outside the state, nothing against the state. American
neoliberals of both the pluralist and rightwing camps have created a societal
model not just in one nation like Mussolini and Hitler but globally with the
result of: “everything within
neoliberalism, nothing against neoliberalism, nothing outside neoliberalism.
Neoliberal
totalitarianism finds different expression in the US than in India, in Hungary
than in Israel. In “Neoliberal Fascism:
Free Markets and the Restructuring of Indian Capitalism,” Shankar
Gopalakrishnan observed that exclusive Hindu nationalism has been the catalyst
for rightwing neoliberalism to mobilize popular support. “Hindutva [a term coined by Vinayak Damodar Savarkar in 1923 to
assert exclusive Hindu dominance] is seen
as an effort by neoliberalism, or perhaps more broadly by capitalism, to divert
attention from class conflict, to divide and weaken working class struggles and
to deflect class-driven anxieties on to minority communities. This
approach is problematic in two senses. First, it does not explain why
Hindutva organisations are able to develop a mass base, except to the extent
that they are seen to be appealing to “historical identity” or “emotive”
issues. The state exists only as the expression and guarantor of a
collectivity founded around a transcendent principle: The ideal state is the guarantor of the Hindu rashtra, a “nation” that
exists as an organic and harmonious unity between “Hindus.”
Whereas under Ronald Reagan’s
neoliberal populist policies (Reaganism) under a rightwing political umbrella
the state structure was strengthened in the US, in the process of implementing
neoliberal policies state bureaucratic functions have been outsourced to
private companies thus keeping with the spirit of corporate-welfare goals. Other
countries followed a path similar to the one of the US. Contrary to the claims of many neoliberal scholars, politicians and
commentators, neoliberalism has not weakened the state simply because the
ideology lays claims to a hegemonic private sector and weak state. It is true
that the Keynesian-welfare state structure has been weakened while the
corporate-welfare-militarist-police-state structure has been strengthened.
However, in the less developed capitalist countries the public sector has
weakened as a result of the US and EU imposing the neoliberal model which
drains the public sector of any leverage in stimulating economic and social
development investment because of the transfer of public assets and public
services to the private sector. (http://jgu.edu.in/article/indias-neoliberal-path-perdition; Monica Prasad, The Politics of Free Markets, 2006)
Gaspar Miklos
Tamas, a Romanian political philosopher of the George Lukacs-inspired Budapest
School, argues that global division of labor in the neoliberal era has not only
resulted in wealth transfer from the bottom up but it has diminished national
sovereignty and citizenship for those in less developed (periphery) nations. “The new dual sate is alive and well:
Normative State for the core populations of the capitalist center, and another
State of arbitrary decrees for the non-citizens who are the rest. Unlike in
classical fascism, this second State is only dimly visible from the first. The
radical critique protesting that liberty within the Normative State is an
illusion, although understandable, is erroneous. The denial of citizenship
based not on exploitation, oppression and straightforward discrimination, but
on mere exclusion and distance, is difficult to grasp, because the mental
habits of liberation struggle for a more just redistribution of goods and
powers are not applicable. The problem is not that the Normative State is
becoming more authoritarian: rather, that it belongs only to a few.” https://www.opendemocracy.net/people-newright/article_306.jsp
If the normative
state is the domain of the very few with the rest under the illusion of
inclusion, Miklos Tamas concludes that we are living in a global post-fascist
era which is not the same as the interwar totalitarian model based on a mass
movement of Fascism. Instead, neoliberal totalirarianism categorically rejects
the Enlightenment tradition of citizenship which is the very essence of the bourgeois
social contract. While the normative state in advanced countries is becoming
more authoritarian with police-state characteristics, the state in the
periphery whether Eastern Europe, Latin America or Africa is swept along by
neoliberal policies that drive it toward authoritarianism as much as the state
in Trump’s America as in parts of Europe to the degree that in January 2018
Angela Merkel’s Christian Democratic Union (CDU) faced the prospect either of
new elections or entering into a coalition with the neo-Nazi Alternative fur Deutchalnd (AfD). https://www.prosper.org.au/2010/05/25/the-counter-enlightenment/
The rightwing
course of the Western World spreading into the rest of the world is not only
because of IMF austerity used as leverage to impose neoliberalism in developing
nations. Considering that countries have been scrambling to attract foreign
investment which carries neoliberal policies of deregulation, privatization, weak
trade unions and low taxes as a precondition, the entire world economic system
is the driving force toward a form of totalitarianism. As Miklos Tamas argues,
this has diluted national sovereignty of weaker countries, allowing national
capitalists and especially multinational corporations to play a determining
role in society against the background of a weak state structure. Along with
weakened national sovereignty, national citizenship in turn finds expression in
extreme rightwing groups to compensate for loss of independence as the
bourgeois social contract presumably guarantees. (Aihwa Ong, Neoliberalism
as Exception: Mutations in Citizenship and Sovereignty, 2006; http://www.e-ir.info/2012/08/22/globalization-does-not-entail-the-weakening-of-the-liberal-state/
It is undeniable that there is a qualitative difference in Berlin and Rome
under neoliberal regimes today than it was under Fascism. It would be a mistake
to lump a contemporary neoliberal society together with the Third Reich and
Fascist Italy, a dreadful and costly mistake that Stalinists made in the 1930s.
Interwar totalitarianism existed under one-party state with a popular base
operating as a police state. Although many countries under varieties of
neoliberal regimes have an electoral system of at least two parties alternating
power, the ruling parties pursue neoliberal policies with variations on social
and cultural issues (identity politics), thus operating within the same policy
framework impacting peoples’ living standards.
Not just leftist academic critics, but even the progressive democratic Salon
magazine recognized during the US election of 2016 that the neoliberal state
would prevail regardless of whether Trump or Clinton won the presidential
contest. “Neoliberalism
presumes a strong state, working only for the benefit of the wealthy, and as
such it has little pretence to neutrality and universality, unlike the
classical liberal state. I would go so
far as to say that neoliberalism is the final completion of capitalism’s
long-nascent project, in that the desire to transform everything—every
object, every living thing, every fact on the planet—in its image had not been
realized to the same extent by any preceding ideology.
In neoliberal society either of the
pluralist-diversity or of the authoritarian political camp there are elements
of polizeistaat though not nearly
full blown as in the Third Reich. While conformity to the status quo and
self-censorship is the only way to survive, modern means of communication and
multiple dissident outlets attacking the status quo from the right, which is
far more pervasive and socio-politically acceptable than doing so from the left,
has actually facilitated the evolution of the new totalitarian state. http://www.thegreatregression.eu/progressive-neoliberalism-versus-reactionary-populism-a-hobsons-choice/
Whereas big business collaborated
closely with Fascist dictators from the very beginning to secure the
preeminence of the existing social order threatened by the crisis of democracy
created by capitalism, big business under the neoliberal social contract has
the same goal, despite disagreement on the means of forging political
consensus. Partly because neoliberalism carries the legacy of late 19th
century liberalism and operates in most countries within the parliamentary
system, and partly because of fear of grassroots social revolution, a segment
of the capitalist class wants to preserve the democratic façade of the
neoliberal social contract by perpetuating identity politics. In either case,
‘economic fascism’ as the essence of neoliberalism, or post-fascism as Miklos
Tamas calls it, is an inescapable reality. (Andrea Micocci and Flavia Di Mario,
The
Fascist Nature of Neoliberalism, 2017).
In distinguishing
the composition and goals of the parliamentary state vs. the Fascist one-party
state, Italian Fascism’s theoretician Giovanni Gentile characterized it as
‘totalitario’; a term also applied to Germany’s Third Reich the latter which
had the added dimension of anti-Semitism as policy. Arguing that ideology in
the Fascist totalitarian state had a ubiquitous role in every aspect of life
and power over people, Gentile and Mussolini viewed such state as the catalyst
to a powerful nation-state that subordinates all institutions and the lives of
citizens to its mold. In “La Dottrina del Fascismo” (Gentile
and Mussolini, 1932), Musolini made famous the statement: "Everything within the state, nothing outside the state, nothing
against the state," although Hitler’s polizeistaat was more totalitarian
because it had the means to achieve policy goals stated in Mein Kampf.
The convergence of neoliberalism and
Fascism is hardly surprising when one considers that both aim at a totalitarian
society of different sorts, one of state-driven ideology and the other
market-driven with the corporate welfare state behind it. In some respects, Sheldon Wolin’s the “inverted totalitarianism” theory places
this issue into another perspective, arguing that despite the absence of a
dictator the corporate state behind the façade of ‘electoral democracy’ is an
instrument of totalitarianism. Considering the increased role of
security-intelligence-surveillance agencies in a presumably open society, it is
not difficult to see that society has more illiberal than classic liberal
traits. Sheldon Wolin, Democracy Incorporated: Managed Democracy
and the Specter of Inverted Totalitarianism, 2008)
More powerful than the Axis Powers
combined, American “Inverted totalitarianism” was internationalized during the
Cold War and became more blatant during the war on terror, in large measure used
as a pretext to impose neoliberalism in the name of national security. As the
police-state gradually became institutionalized in every respect from illegal
surveillance of citizens to suppressing dissent to the
counterterrorism-neoliberal regime, it was becoming clearer to many scholars
that a version of fascism was emerging in the US which also sprang up around
the world. (Charlotte Heath-Kelly et al. eds., Neoliberalism and Terror:
Critical Engagements, 2016; https://deeppoliticsforum.com/forums/showthread.php?15074-Chris-Hedges-The-Great-Unraveling-USA-on-the-brink-of-neo-fascist-police-state#.WifwyLBrzIU
Almost a century after the era of Fascist
totalitarianism that led to WWII, the transition of capitalism’s
global structure with a shifting core from the US and northwest Europe to East
Asia has entailed intense global competition for capital accumulation to the
degree that the advanced countries have been pushing living standards downward
to compete with low-wage global markets. The process of draining greater
surplus value from labor especially from the periphery countries where
IMF-style austerity policies have resulted in massive capital transfer to the
core countries has taken place under the neoliberal social contract that has
striking similarities with Fascism.
Backed by the state in the advanced capitalist countries, international
organizations among them the IMF have been promoting economic fascism under the
label of ‘neoliberal reforms’, thus molding state structures accordingly.
Neoliberal totalitarianism is far more organized and ubiquitous than interwar
Fascism not only because of the strong national state structure of core
countries and modern technology and communications networks that enables
surveillance and impose subtle forms of indoctrination, but also because the
international agencies established by the US under the Bretton Woods system
help to impose policies and institutions globally.
b. Characteristics of the Illiberal Neoliberal
Society
The genesis of illiberal politics can be traced back to the end of WWI
when Europeans witnessed the unraveling of the rationalist order of the
Enlightenment rooted in Lockean liberalism. Influenced by the wars of
imperialism that led the First World War at the end of which Vladimir Lenin led
the Bolsheviks to a revolutionary victory over Czarist Russia, Joseph
Schumpeter like many European scholars was trying to make sense of how capitalism’s
forcible geographic expansion (imperialism) led to such global disasters that
undermined the rationalist assumptions of the Enlightenment about society and
its institutions. In his Sociology of Imperialism (1919), he
wrote the following about the relationship of the bourgeoisie with the
state.
“The bourgeoisie did not simply supplant the sovereign, nor did it make
him its leader, as did the nobility. It merely wrested a portion of its power
from him and for the rest submitted to him. It did not take over from the
sovereign the state as an abstract form of organization. The state remained a
special social power, confronting the bourgeoisie. In some countries it has
continued to play that role to the present day. It is in the state that
the bourgeoisie with its interests seeks refuge, protection against external
and even domestic enemies. The bourgeoisie seeks to win over the state for
itself, and in return serves the state and state interests that are different
from its own.”
The strong state structure of the imperial state that
the bourgeoisie supported as a vehicle of expanding their interests globally
while maintaining the social order at the national level held true only for the
advanced capitalist countries eagerly trying to secure international markets at
any cost including armed conflict. While essential for capital integration and
expansion, the strong state structure was and remains an anathema to the
bourgeoisie, if its role is to make political, economic and social concessions
to the laboring and middle classes which are the popular base for bourgeois
political parties. While classical liberal theory expresses the interests of
capitalism its role is not to serve in furtherance of political equality for
the simple reason that capitalism cannot exist under such a regime. Both John
Locke and John Stuart Mill rejected political egalitarianism, while Schumpeter
viewed democratic society with egalitarianism as an integral part of democracy.
Rejecting Locke’s and Mill’s abstract receptiveness to egalitarianism,
neoliberals of either the pluralist or authoritarian camp are blatantly adopt
illiberal policies that exacerbate elitism, regardless of the rhetoric they
employ to secure mass popular support.
Characterized by elitism, class, gender, racial and ethnic inequality,
limits on freedom of expression, on human rights and civil rights, illiberal
politics thrives on submission of the masses to the status quo. In his essay
The Political Economy of Neoliberalism and Illiberal Democracy, Garry Jacobs, an
academic/consultant who still believes in classical liberal economics operating
in a pluralistic and preferably non-militaristic society, warns that world-wide
democracy is under siege. “Democratic elections have become the means for installing leaders with
little respect for democratic values. The tolerance, openness and inclusiveness
on which modern democracy is founded are being rejected by candidates and
voters in favor of sectarian, parochial fears and interests. The role of the
free press as an impartial arbiter of facts is being undermined by the rise of
private and public news media conglomerates purveying political preference as
fact combined with a blinding blizzard of fake news. Party politics has been
polarized into a winner-take-all fight to the finish by vested-interests and
impassioned extremist minorities trying to impose their agendas on a complacent
majority. Corporate power and money power are transforming representative
governments into plutocratic pseudo-democracies. Fundamentalists are seizing
the instruments of secular democracy to impose intolerant linguistic, racial
and religious homogeneity in place of the principles of liberty and harmonious
heterogeneity that are democracy’s foundation and pinnacle of achievement.”
While neoliberals in the populist rightwing wholeheartedly share and
promote such views, those who embrace the pluralist-identity politics camp are
just as supportive of many aspects of the corporate
welfare-police-counterterrorism state as a means to engender domestic
sociopolitical conformity and to achieve closer global economic integration.
The question is not so much what each political camp under the larger
neoliberal umbrella pursues as a strategy to mobilize a popular base but
whether the economic-social policies intertwined with a
corporate-welfare-police-counterterrorism state is the driving force toward a
Fascist model of government. In both the pluralist model
with some aspects of the social safety net, and the rightwing populist version
neoliberalism’s goal is rapid capital accumulation on a world scale, institutional
submission of the individual and molding the citizen’s subjective reality
around the neoliberal ideology.
Illiberal politics in our time is partly both
symptomatic of and a reaction to neoliberal globalism and culture wars that serve
to distract from the intensified class struggle boiling beneath the surface.
Rhetorically denouncing globalist neoliberalism, populist rightwing politicians
assert the importance of national capitalism but always within the perimeters
of neoliberal policies. Hence they co-opt the socio-cultural
positions of nationalist extremists as a political strategy to mobilize the
masses. Scholars, journalists and politicians have speculated whether
the rising tide of rightwing populism pursuing neoliberalism under
authoritarian models not just in the Western World, but Eastern Europe, South
Asia and Africa reflects the rejection of liberal democracy and the triumph of
illiberal politics that best reflects and serves the political economy.
Unquestionably, there is a direct correlation between the internationalization
of the Western neoliberal transformation model imposed on the world in the
post-Soviet era and the rise of rightwing populism reacting to the gap between
the promises of what capitalism was supposed to deliver and the reality of
downward pressures on living standards. http://www.counterfire.org/interview/18068-india-s-nightmare-the-extremism-of-narendra-modi;http://ac.upd.edu.ph/index.php/news-announcements/1201-southeast-asian-democracy-neoliberalism-populism-vedi-hadiz;http://balticworlds.com/breaking-out-of-the-deadlock-of-neoliberalism-vs-rightwing-populism/
Not just the US, but Europe has been
flirting with ‘illiberal democracy’ characterized by strong authoritarian-style
elected officials as Garry Jacobs has observed. Amid elections in Bosnia in
1996, US diplomat Richard Holbrooke wondered about the rightwing path of former
Yugoslav republics. "Suppose the election was declared free and fair and those elected
are "racists, fascists, separatists, who are publicly opposed to [peace
and reintegration]. That is the dilemma." Twenty years after what
Holbrooke dreaded election outcomes in Yugoslavia, the US elected a rightwing
neoliberal populist leading the Republican Party and making culture wars a
central theme to distract from the undercurrent class struggle in the country. A
structural issue that transcends personalities, this reality in America is
symptomatic of the link between neoliberalism and the rise of illiberal
democracy in a number of countries around the world. https://www.foreignaffairs.com/articles/1997-11-01/rise-illiberal-democracy
Some political observers analyzing the rightist orientation of neoliberal
policies have concluded that neoliberalism and Fascism have more in common than
people realize. In 2016, Manuela Cadelli, President of the Magistrates Union of
Belgium, wrote a brief article arguing that Neoliberalism is indeed a form of
Fascism; a position people seem to be willing to debate after the election of
Donald Trump pursuing neoliberal policies with a rightwing populist ideological
and cultural platform to keep a popular base loyal to the Republican Party. “Fascism may be defined as the subordination
of every part of the State to a totalitarian and nihilistic ideology. I argue
that neoliberalism is a species of fascism because the economy has brought
under subjection not only the government of democratic countries but also every
aspect of our thought. The state is now at the disposal of the economy and of
finance, which treat it as a subordinate and lord over it to an extent that
puts the common good in jeopardy.” http://www.defenddemocracy.press/president-belgian-magistrates-neoliberalism-form-fascism/
It is ironic that
neoliberal society is ‘a species of fascism’, but there no widespread popular
opposition from leftist groups to counter it. People remain submissive to the
neoliberal state that has in fact eroded much of what many in the pluralist
camp hail as liberal democratic institutions. Most adapt to the status quo
because to do otherwise means difficulty surviving today just as it was
difficult to survive under Fascism for those in opposition; as Palmiro
Togliatti noted (Lectures on Fascism, 1935) when he cautioned about castigating
workers who joined the party simply because they placed survival of their
family above any progressive ideology. Because evidence of systemic
exploitation ingrained into society passes as the ‘norm’, and partly because
repression targets minority groups, migrants, and the working class, especially
those backing trade unions and progressive political parties, people support
the neoliberal state that they see as the constitutional entity and the only
means for survival.
The media, government
and mainstream institutions denounce anyone crying out for social justice,
human rights and systemic change. Such people are ‘trendy rebels’, as though
social justice is a passing fad like a clothing line, misguided idealists or
treasonous criminals. Considering that the corporate-owned and state media
validates the legitimacy of the neoliberal social contract, the political class
and social elites enjoy the freedom to shape the state’s goals in the direction
toward a surveillance police-state. All of this goes without notice in the age
when it is almost expected because it is defaulted to technology making easy to
detect foreign and domestic enemies while using the same technology to shape the
citizen’s subjective reality.
Partly because of the communications revolution in the digital age,
neoliberalism has the ability to mold the citizen beyond loyalty to the social
contract not just into mechanical observance but total submission to its institutions
by reshaping the person’s values and identity. In this respect, neoliberalism
is not so different from Fascism whose goal was to mold the citizen. “Neoliberalism has been more
successful than most past ideologies in redefining subjectivity, in making
people alter their sense of themselves, their personhood, their identities,
their hopes and expectations and dreams and idealizations. Classical liberalism
was successful too, for two and a half centuries, in people’s self-definition,
although communism and fascism succeeded less well in realizing the “new man.”
It cannot be emphasized enough that neoliberalism is not classical
liberalism, or a return to a purer version of it, as is commonly misunderstood;
it is a new thing, because the market, for one thing, is not at all
free and untethered and dynamic in the sense that classical liberalism
idealized it.
Although people go
about their daily lives focused on their interests, they operate against the
background of neoliberal institutions that determine their lives in every
respect from chatting on their cell phones to how they live despite their
illusions of free will. As the world witnessed a segment of the population
openly embracing fascism from movement to legitimate political party in interwar
Europe, a corresponding rise in racism and ethnocentrism under the umbrella of
rightwing neoliberal populism has taken place in the first two decades of the
21st century.
Representing the
UN Human Rights agency, Prince Zeid bin Ra’ad al-Hussein stated that 2016 was
disastrous for human rights, as the ‘clash of civilizations’ construct has
become ingrained into the political mainstream in Western countries. “In
some parts of Europe, and in the United States, anti-foreigner rhetoric full of
unbridled vitriol and hatred, is proliferating to a frightening degree, and is
increasingly unchallenged. The rhetoric of fascism is no longer confined to a
secret underworld of fascists, meeting in ill-lit clubs or on the 'deep
net'. It is becoming part of normal daily discourse.”http://www.independent.co.uk/news/world/politics/united-nations-chilling-warning-rise-fascism-human-rights-prince-zeid-a7464861.html
Because neoliberalism has pushed all mainstream bourgeois political parties
to the right, the far right no longer seems nearly as extreme today as it did
during the Vietnam War’s protest generation who still had hope for a socially
just society even if that meant strengthening the social welfare system. The
last two generations were raised knowing no alternative to neoliberalism; the
panacea for all that ails society is less social welfare and privatization of
public services within the framework of a state structure buttressing corporate
welfare. The idea that nothing must be tolerated outside the hegemonic market
and all institutions must mirror the neoliberal model reflects a
neo-totalitarian society where sociopolitical conformity follows because
survival outside the system is not viable.
Although Western neoconservatives have employed the term ‘neo-totalitarian’
to describe Vladimir Putin’s Russia, the term applies even more accurately to
the US and some European nations operating under neoliberal-military-police
state structures with as much power than the Russian bureaucratic state has at
its disposal. The contradiction of neoliberalism rests in the
system’s goal of integrating everyone into the neo-totalitarian mold. Because
of the system’s inherent hierarchical structure, excluding most from the
institutional mainstream and limiting popular sovereignty to the elites exposes
the exploitation and repression goals that account for the totalitarian nature
of the system masquerading as democratic where popular sovereignty is diffused.
The seemingly puzzling aspect of the rise in rightwing populism across the
globe that rests in marginalization of a segment of the population and the
support for it not just from certain wealthy individuals financing extremist
movements, but from a segment of the middle class and even working class lining
up behind it because they see their salvation with the diminution of weaker
social groups. This pattern was also evident in Nazi Germany, Fascist Italy and
pro-Nazi authoritarian regimes of the interwar era. https://www.demdigest.org/neo-totalitarian-russia-potent-existential-threat-west/; Benjamin
Moffitt, The Global Rise of Populism (2017.
Because of contradictions in
bourgeois liberal democracy where capital accumulation at any social cost is
the goal, the system produced the current global wave of rightwing populism
just as capitalism in the interwar era gave rise to Fascism. As one analyst put it, “The risk
democratic formations continually face is internal disintegration such that the
heterogeneous elements of the social order not only fail to come together
within some principle of or for unity, but actively turn against one another.
In this case, a totally unproductive revolution takes place. Rather than
subversion of the normative order causing suffering, rebellion or revolution
that might establish a new nomos of shared life as a way of establishing a new
governing logic, the dissociated elements of disintegrating democratic
formations identify with the very power responsible for their
subjection--capital, the state and, the strong leader. Thus the
possibility of fascism is not negated in neoliberal formations but is an ever
present possibility arising within it. Because the value of the social
order as such is never in itself sufficient to maintain its own constitution,
it must have recourse to an external value, which is the order of the sacred
embodied by the sovereign. http://readersupportednews.org/pm-section/78-78/41987-neoliberalism-fascism-and-sovereignty/
Public opinion surveys of a number of countries around the world,
including those in the US, indicated that most people do not favor the existing
social contract rooted in neoliberal policies that impact everything from
living standards and labor policy to the judicial system and foreign affairs.
Instead of driving workers toward a leftwing revolutionary path, many support
rightwing populism that has resulted in the rise of even greater oppression and
exploitation. Besides nationalism identified with the powerful elites as
guardians of the national interest, many among the masses believe that somehow
the same social contract responsible for existing problems will provide salvation
they seek. While widespread disillusionment with neoliberal globalization seems
to be at the core in the rise of rightwing populism, the common denominator is
downward social mobility. (Doug Miller, Can
the World be Wrong? 2015)
As Garry Jacobs
argues, “Even mature democracies show
signs of degenerating into their illiberal namesakes. The historical record
confirms that peaceful, prosperous, free and harmonious societies can best be
nurtured by the widest possible distribution of all forms of power—political,
economic, educational, scientific, technological and social—to the greatest
extent to the greatest number. The aspiration for individual freedom can only
be realized and preserved when it is married with the right to social equality.
The mutual interdependence of the individual and the collective is the key to
their reconciliation and humanity’s future. http://www.cadmusjournal.org/article/volume-3/issue-3/political-economy-neoliberalism-and-illiberal-democracy
Just as in the
interwar era when many Europeans lost confidence in the rationalism of the
Enlightenment and lapsed into amorality and alienation that allowed for even
greater public manipulation by the hegemonic culture, in the early 21st
the neoliberal social contract with a complex matrix of communications at its
disposal is able to indoctrinate on a mass scale more easily than ever.
Considering the low level of public trust in the mainstream media that most
people regardless of political/ideological position view as propaganda rather
than informational, cynicism about national and international institutions
prevails. As the fierce struggle for power among mainstream political parties
competing to manage the state on behalf of capital undercuts the credibility of
the political class, rightwing elements enter the arena as ‘outsider’ messiahs
above politics (Bonapartism in the 21st century) to save the nation,
while safeguarding the neoliberal social contract. This is as evident in France
where the pluralist political model of neoliberalism has strengthened the
neo-Fascist one that Marine Le Pen represents, as in Trump’s America where the
Democratic Party’s neoliberal policies helped give rise to rightwing populism.
As the following article in The Economist points out, widespread
disillusionment with globalist neoliberal policies drove people to the right
for an enemy to blame for all the calamities that befall society. “Beset by stagnant wage growth,
less than half of respondents in America, Britain and France believe that
globalisation is a “force for good” in the world. Westerners also say the world
is getting worse. Even Americans, generally an optimistic lot, are feeling
blue: just 11% believe the world has improved in the past year. The turn
towards nationalism is especially pronounced in France, the cradle of liberty.
Some 52% of the French now believe that their economy should not have to rely
on imports, and just 13% reckon that immigration has a positive effect on their
country. France is divided as to whether or not multiculturalism is something
to be embraced. Such findings will be music to the ears of Marine Le Pen, the
leader of the National Front, France’s nationalist, Eurosceptic party. Current
(and admittedly early) polling has her tied for first place in the 2017 French
presidential race. https://www.economist.com/blogs/graphicdetail/2016/11/daily-chart-12
Similar to deep-rooted cultural and ideological traits of Nazism in German
society, there are similar traits in contemporary US, India and other countries
where rightwing populism has found a receptive public. Although there are
varieties of populism from Lepenism (Marine Le Pen’s
National Front) to Trumpism (US Republican Donald Trump) to Modism (India’s
Narendra Modi), they share common characteristics, including cult of
personality as a popular rallying catalyst, promoting hatred and
marginalization of minority groups, and promising to deliver a panacea to “society”
when in fact their policies are designed to strengthen big capital.
Rightwing populist politicians who pursue neoliberal policies are
opportunistically pushing the political popular base toward consolidation of a
Fascist movement and often refer to themselves as movement rather than a party.
Just as there were liberals who refused to accept the
imminent rise of Fascism amid the parliamentary system’s collapse in the 1920s,
there are neoliberals today who refuse to accept that the global trend of
populism is a symptom of failed neoliberalism that has many common characteristics
with Fascism. In an article entitled “Populism
is not Fascism: But it could be a Harbinger” by Sheri Berman, the
neoliberal journal Foreign Affairs, acknowledged that liberal bourgeois democracy
is losing its luster around the world. However, the author would not go as far
as to examine the structural causes for this phenomenon because to do so would
be to attack the social contract within which it operates. Treating rightwing
populism as though it is a marginal outgrowth of mainstream conservatism and an
aberration rather than the outgrowth of the system’s core is merely a thinly
veiled attempt to defend the status quo of which rightwing populism is an
integral part.
Structural Exploitation under the Neoliberal Social Contract
Structural exploitation - “a property of institutions or systems in which the “rules of the game”
unfairly benefit one group of people to the detriment of another” https://plato.stanford.edu/entries/exploitation/ - has been an incontrovertible reality of all class-based societies from the
establishment of the earliest city-states in Mesopotamia until the present. Usually but not always intertwined with social oppression, structural
exploitation entails a relationship of social dominance of an elite group over
the rest of society subordinated for the purpose of economic, social,
political, and cultural exploitation. Legitimized by the social contract,
justifications for institutional exploitation include safety and security of
country, eliminating impediments to progress, and emulating nature’s
competitive forces that exist in the animal kingdom and reflect human nature.
From
Solon’s laws in 6th century BC Athens until our contemporary
neoliberal era, social contract theory presumes that the state is the catalyst
for social harmony if not fairness and not for a privileged social class to
exploit the rest of society. No legal system has ever been codified that
explicitly states its goal is to use of the state as an instrument of
exploitation and oppression. In reality however, from ancient Babylon when King
Hammurabi codified the first laws in 1780 B.C. until the present when
multinational corporations and wealthy individuals directly or through
lobbyists exert preponderate influence in public policy the theoretical
assumption is one of fairness and justice for all people as a goal for the
social contract.
In the age
of the Fourth Industrial Revolution – biotechnology, nanotechnology, quantum
computing, and artificial intelligence – presumably to serve mankind as part of
the social contract rather than to exploit more thoroughly and marginalize a
large segment of humanity, the persistence of structural exploitation and
oppression challenges those with a social conscience and morality rooted in
humanist values to question what constitutes societal progress and public
interest. Liberal and Christian-Libertarian arguments about free will
notwithstanding, it has always been the case that mainstream institutions and
the dominant culture indoctrinate people into believing that ending exploitation
by changing the social contract is a utopian dream; a domain relegated to
poets, philosophers and song writers lacking proper grounding in the reality of
mainstream politics largely in the service of the dominant socioeconomic class.
The paradox in neoliberal ideology is its emphasis on free choice, while the
larger goal is to mold the subjective reality within the neoliberal
institutional structure and way of life. The irreconcilable aspects of
neoliberalism represent the contradictory goals of the desire to project
democratic mask that would allow for popular sovereignty while pursuing capital
accumulation under totalitarian methods. http://www.philosophybasics.com/branch_contractarianism.html’ http://www.patheos.com/blogs/tippling/2017/05/15/indoctrination-and-free-will/
Social cooperation becomes dysfunctional when
distortions and contradictions within the system create large-scale social
marginalization exposing the divergence between the promise of the neoliberal
social contract and the reality in peoples’ lives. To manage the dysfunction by
mobilizing popular support, the political elites of both the pluralist and the
authoritarian-populist wing operating under the neoliberal political umbrella
compete for power by projecting the image of an open democratic society. Intra-class
power struggles within the elite social and political classes vying for power distracts
from social exploitation because the masses line behind competing elites
convinced such competition is the essence of democracy. As long as the majority
in society passively acquiesces to the legitimacy of the social contract, even
if in practice society is socially unjust, the status quo remains secure until
systemic contradictions in the political economy make it unsustainable. https://mises.org/library/profound-significance-social-harmony
In the last three centuries, social
revolutions, upheavals and grassroots movements have demonstrated that people
want a social contract that includes workers, women, and marginalized groups
into the mainstream and elevates their status economically and politically. In
the early 21st century, there are many voices crying out for a new
social contract based on social justice and equality against neoliberal
tyranny. However, those faint voices are drowned against the preponderate
neoliberal public policy impacting every sector while shaping the individual’s
worldview and subjective reality. The triumph of neoliberal orthodoxy has
deviated from classical liberalism to the degree that dogmatism
‘single-thought’ process dominates not just economics, not just the social
contract, but the very fabric of our humanity. http://www.tandfonline.com/doi/abs/10.1080/21598282.2013.761449?journalCode=rict20;
https://www.theguardian.com/news/2017/aug/18/neoliberalism-the-idea-that-changed-the-world
Under neoliberalism, “Uberization” as a way of life is
becoming the norm not just in the ‘financialization’ neoliberal economy resting
on speculation rather than productivity but in society as well. The neoliberal
ideology has indoctrinated the last two generations that grew up under this
system and know no other reality thus taking for granted the neoliberal way of
life as natural as the air they breathe. Often working two jobs, working
overtime without compensation or taking work home just to keep the job has
become part of chasing the dream of merely catching up with higher costs of
living. People have accepted perpetual work enmeshed with the capitalist
ideology of perpetual economic growth perversely intertwined with progress of
civilization. The corporate ideology of “grow or die” at any cost is in reality
economic growth confined to the capitalist class, while fewer and fewer people
enjoy its fruits and communities, cities, entire countries under neoliberal
austerity suffer.
The incentive for conformity is predicated on the belief that the benefits
of civilization would be fairly distributed if not in the present then at some
point in the future for one’s children or grandchildren; analogous to living a
virtuous life in order to enjoy the rewards after death. As proof that the
system works for the benefit of society and not just the capitalist class,
neoliberal apologists point to stock market gains and surprisingly there is a
psychological impact – the wealth effect – on the mass consumer who feels optimistic
and borrows to raise consumption. Besides the fact that only a very small
percentage of people on the planet own the vast majority of securities, even in
the US there is no correlation between stock market performance and living
standards. (John Seip and Dee Wood Harper, The Trickle Down Delusion, 2016)
If we equate the stock market with the ‘wealth of the nation’, then in 1982
when the S & P index stood at 117 rising to 2675 in December 2017, the
logical conclusion is that living standards across the US rose accordingly.
However, this is the period when real incomes for workers and the middle class
actually declined despite sharp rise in productivity and immense profits
reflected in the incomes gap reflected in the bottom 90% vs. the top 10%. This
is also the period when we see the striking divergence between wealth
accumulation for the top 1% and a relative decline for the bottom 90%. https://www.nytimes.com/2017/11/17/upshot/income-inequality-united-states.html; https://ourworldindata.org/income-inequality/
A research study compiled by the pro-organized labor non-profit think tank ‘Economic Policy Institute’ stresses
the divergence between productivity and real wages. While the top 0.01% of
America’s experienced 386% income growth between 1980 and 1914, the bottom 90%
suffered 3% real income drop. Whereas in 1980 income share for the bottom 90%
stood at 65% and for the top 1% it stood at 10%, by 2014 the bottom 90% held
just half of the income, while the top 1% owned 21%. This dramatic income
divergence, which has been shown in hundreds of studies and not even neoliberal
billionaires deny their validity, took place under the shift toward the full
implementation of the neoliberal social contract. It is significant to note
that such income concentration resulting from fiscal policy, corporate subsidy
policy, privatization and deregulation has indeed resulted in higher
productivity exactly as neoliberal apologists have argued. However, higher
worker productivity and higher profits has been made possible precisely because
of income transfer from labor to capitalist.http://www.epi.org/publication/charting-wage-stagnation/; https://aneconomicsense.org/2015/07/13/the-highly-skewed-growth-of-incomes-since-1980-only-the-top-0-5-have-done-better-than-before/
“Real hourly compensation of production,
nonsupervisory workers who make up 80 percent of the workforce, also shows pay
stagnation for most of the period since 1973, rising 9.2 percent between 1973
and 2014.Net productivity grew 1.33 percent each year between 1973 and
2014, faster than the meager 0.20 percent annual rise in median hourly
compensation. In essence, about 15 percent of productivity growth between 1973
and 2014 translated into higher hourly wages and benefits for the typical
American worker. Since 2000, the gap between productivity and pay has risen
even faster. The net productivity growth of 21.6 percent from 2000 to 2014
translated into just a 1.8 percent rise in inflation-adjusted compensation for
the median worker (just 8 percent of net productivity growth).Since 2000, more
than 80 percent of the divergence between a typical (median) worker’s pay
growth and overall net productivity growth has been driven by rising inequality
(specifically, greater inequality of compensation and a falling share of income
going to workers relative to capital owners).Over the entire 1973–2014 period,
rising inequality explains over two-thirds of the productivity–pay divergence.” (Josh Bivens and Lawrence Mishel, "Understanding
the Historic Divergence Between Productivity and a Typical Worker’s Pay Why It
Matters and Why It’s Real" in Economic
Policy Institute, 2015, http://www.epi.org/publication/understanding-the-historic-divergence-between-productivity-and-a-typical-workers-pay-why-it-matters-and-why-its-real/
The average corporate tax rate in the
world has been cut in half in the last two decades from about 40% to 22%, with
the effective rate actually paid lower than the official rate. This represents
a massive transfer of wealth to the highest income brackets drained from the
working class. More than half-a-century ago, American anthropologist Jules
Henry wrote that: “The fact that our
society places no limit on wealth while making it accessible to all helps
account for the ‘feverish’ quality Tocqueville sensed in American
civilization.” Culture Against Man (1963). The myth that the neoliberal policies
in the information age lead toward a society richer for all people is readily
refuted by the reality of huge wealth distribution gaps resulting from
‘informational capitalism’ backed by the corporate welfare state.
Capital accumulation not just in the
US but on a world scale without a ceiling has resulted in more thorough
exploitation of workers and in a less socially just society today than in the
early 1960s when Jules Henry was writing and it is headed increasingly toward
authoritarian models of government behind the very thin veneer of meaningless
elections. Against this background of unfettered neoliberalism, social
responsibility is relegated to issues ranging from corporate-supported
sustainable development in which large businesses have a vested interest as
part of future designs on capital accumulation, to respecting lifestyle and
cultural and religious freedoms within the existing social contract. (Dieter
Plehwe et al. eds., Neoliberal Hegemony, 2006; Carl Ferenbach and Chris Pinney, “Toward
a 21st Century Social Contract” Journal of Applied Corporate Finance,
Vol. 24, No 2, 2012; http://onlinelibrary.wiley.com/doi/10.1111/j.1745-6622.2012.00372.x/abstract
At its Annual conference in 2017 where
representatives from the ‘Fortune 500’, academia, think tanks, NGOs, and
government, business consultancy group BSR provided the following vision under
the heading “A 21st Century Social Contract”: “The nature of work is changing very
rapidly. Old models of lifelong employment via business and a predictable
safety net provided by government are no longer assured in a new demographic,
economic, and political environment. We see these trends most clearly in the
rise of the “gig economy,” in which contingent workers (freelancers,
independent contractors, consultants, or other outsourced and non-permanent
workers) are hired on a temporary or part-time basis. These workers make up
more than 90 percent of new job creation in European countries, and by 2020, it
is estimated that more than 40 percent of the U.S. workforce will be in
contingent jobs.” https://bsr17.org/agenda/sessions/the-21st-century-social-contract
Representing multinational corporate
members and proud sponsors of sustainable development solutions within the
neoliberal model, BSR applauded the aspirations and expectations of today’s
business people that expect to concentrate even more capital as the economy
becomes more ‘UBERized’ and reliant on the new digital technology. Despite fear
and anxiety about a bleak techno-science future as another mechanism to keep
wages as close to subsistence if not below that level as possible, peoples’ survival
instinct forces them to adjust their lives around the neoliberal social contract.
https://www.technologyreview.com/s/531726/technology-and-inequality/
Reflecting the status quo, the media indoctrinate people to behave as
though systemic exploitation, oppression, division, and marginalization are
natural while equality and the welfare of the community represent an anathema
to bourgeois civilization. What passes as the ‘social norm’, largely reflects
the interests of the socioeconomic elites propagating the ‘legitimacy’ of their
values while their advocates vilify values that place priority on the community
aspiring to achieve equality and social justice. (Robert E. Watkins, “Turning
the Social Contract Inside Out: Neoliberal Governance and Human Capital in Two
Days, One Night”, 2016).
The neoliberal myth that the digital technological revolution and the ‘knowledge based
economy’ (KBE) of endless innovation is the
catalyst not only to economic growth but to the preservation of civilization
and welfare of society has proved hollow in the last four decades. Despite
massive innovation in the domain of the digital and biotech domains,
socioeconomic polarization and environmental degradation persist at much higher
rates today than in the 1970s. Whether in the US, the European Union or
developing nations, the neoliberal promise of ‘prospering together’ has been a
farce. http://onlinelibrary.wiley.com/doi/10.1111/tsq.12106/full; http://www.ricerchestoriche.org/?p=749
Neoliberal
myths about upward linear progress across all segments of society and
throughout the world notwithstanding, economic expansion and contraction only
result in greater capital concentration. “The Swiss Federal Institute of Technology in Zurich have taken a
database listing 37 million companies and investors worldwide, pulled out all
43,060 multinational corporations and the share ownerships linking them to
construct a model of which companies controlled others through shareholding
networks, coupled with each company’s operating revenues, to map the structure
of economic power. The model revealed a core of 1318 companies with
interlocking ownerships. Each of the 1318 had ties to two or more other
companies, and on average they were connected to 20. What’s more, although they
represented 20 per cent of global operating revenues, the 1318 appeared to collectively
own through their shares the majority of the world’s large blue chip and
manufacturing firms, the “real” economy, representing a further 60 per cent of
global revenues. When the team further untangled the web of ownership, it found
much of it tracked back to a super-entity of 147 even more tightly knit
companies (all of their ownership was held by other members of the
super-entity) that controlled 40 per cent of the total wealth in the network.
“In effect, less than 1 per cent of the companies were able to control 40 per
cent of the entire network.” https://weeklybolshevik.wordpress.com/2013/05/19/imperialism-and-the-concentration-of-capital/ http://arxiv.org/PS_cache/arxiv/pdf/1107/1107.5728v2.pdf.
With each passing recessionary cycle of
the past four decades working class living standards have retreated and never
recovered. Although the techno-science panacea has proved a necessary myth and
a distraction from the reality of capital concentration, considering that
innovation and technology are integral parts of the neoliberal system, the media,
politicians, business elites, corporate-funded think tanks and academics
continue to promote the illusive ‘modernist dream’ that only a small segment of
society enjoys while the rest take pride living through it vicariously. (Laurence Reynolds and Bronislaw
Szerszynski, “Neoliberalism and
technology: Perpetual innovation or perpetual crisis?”
Rooted in militarism and police-state
policies, the culture of fear is one of the major ways that the neoliberal
regime perpetually distracts people from structural exploitation and oppression
in a neoliberal society that places dogmatic focus on atomism. Despite the
atomistic value system as an integral part of neoliberalism, neoliberals
strongly advocate a corporate state welfare system. Whether supporting
pluralism and diversity or rightwing populists, neoliberals agree that without
the state buttressing the private sector, the latter will collapse. Author of Liberalism
in the Shadow of Totalitarianism (2007) David Ciepley argues in “The Corporate Contradictions of
Neoliberalism” that the system’s contradictions have led to the
authoritarian political model as its only option moving forward.
“Neoliberalism
was born in reaction against totalitarian statism, and matured at the
University of Chicago into a program of state-reduction that was directed not
just against the totalitarian state and the socialist state but also (and
especially) against the New Deal regulatory and welfare state. … It is a
self-consciously reactionary ideology that seeks to roll back the status quo
and institutionalize (or, on its own understanding, re-institutionalize) the “natural”
principles of the market. … But the contradiction between its individualist
ideals and our corporate reality means that the effort to institutionalize it,
oblivious to this contradiction, has induced deep dysfunction in our corporate
system, producing weakened growth, intense inequality, and coercion. … And when
the ideological support of a system collapses—as
appears to be happening with neoliberalism—then
either the system will collapse, or new levels of coercion and manipulation
will be deployed to maintain it. This appears to be the juncture at which we
have arrived.” https://americanaffairsjournal.org/2017/05/corporate-contradictions-neoliberalism/
Adhering to a tough law-and-order policy, neoliberals have legalized
large-scale criminal activity perpetrated by capitalists against society while
penalizing small-scale crimes carried out mostly by people in the working class
and the marginalized lumpenproletariat.
Regardless of approaches within the neoliberal social contract, neoliberal
politicians agree on a lengthy prison sentences for street gangs selling
narcotics while there is no comparable punishment when it comes to banks laundering
billions including from narcotics trafficking, as Deutsche Bank among other mega banks in the US and EU; fixing rates
as Barclays among others thus
defrauding customers of billions; or creating fake accounts as Wells Fargo, to say nothing of banks
legally appropriating billions of dollars from employees and customers and
receiving state (taxpayer) funding in times of ‘banking crises’. Although it
seems enigmatic that there is acquiescence for large scale crimes with the
institutional cover of ‘legitimacy’ by the state and the hegemonic culture, the
media has conditioned the public to shrug off structural exploitation as an
integral part of the social contract. http://theweek.com/articles/729052/brief-history-crime-corruption-malfeasance-american-banks; https://www.globalresearch.ca/corruption-in-the-european-union-scandals-in-banking-fraud-and-secretive-ttip-negotiations/5543935
Neoliberalism’s reach does not stop with the
de-criminalization of white-collar crime or the transfer of economic policy
from the public sector to corporations in order to reverse social welfare
policies. Transferring sweeping policy powers from the public to the corporate
sector, neoliberalism’s tentacles impact everything from labor and environment
to health, education and foreign policy into the hands of the state-supported
corporate sector in an effort to realize even greater capital concentration at
an even greater pace. This has far reaching implications in peoples’ lives
around the world in everything from their work and health to institutions
totalitarian at their core but projecting an image of liberal democracy on the
surface. (Noam Chomsky and R. W. McChesney, Profit Over People: Neoliberalism and Global Order, 2011; Pauline
Johnson, “Sociology and the Critique of
Neoliberalism” European Journal of
Social Theory, 2014
Comprehensive to the degree that it aims to diminish the state’s role by
having many of its functions privatized, neoliberalism’s impact has reached
into monetary policy trying to supplant it with rogue market forces that test
the limits of the law and hard currencies. The creation of cryptocurrencies
among them BITCOIN that represents the utopian dream of anarcho-libertarians
interested in influencing if not dreaming of ultimately supplanting central
banks’ role in monetary policy is an important dimension of neoliberal
ideology. Techno-utopians envisioning the digital citizen in a neoliberal
society favor a ‘gypsy economy’ operating on a digital currency outside the
purview of the state’s regulatory reach where it is possible to transfer and
hide money while engaging in the ultimate game of speculation. (https://btctheory.com; Samuel
Valasco and Leonardo Medina, The Social Nature of Cryptocurrencies,
2013)
Credited as the neoliberal prophet whose work and affiliate organizations
multinational corporations funded, Austrian economist Friedrich Hayek favored
market forces to determine monetary policy rather than having government in
that role working behind central banks. Aside from the fact that central banks
cater to capital and respond to markets and no other constituency, Hayek’s
proposal (The Denationalization of
Money, 1976) was intended to permit the law of the ‘free market’ (monetary
speculation) determine policy that would impact peoples’ living standards.
Hence capital accumulation would not be constrained by government regulatory
measures and the coordination of monetary policy between central banks. In
short, the law of unfettered banking regulation would theoretically result in
greater economic growth, no matter the consequences owing to the absence of
banking regulatory measures that exacerbate contracting economic cycles such as
in 2008. www.voltaire.org/article30058.html)
In December 2017, the UK and EU warned that cryptocurrencies are used in
criminal enterprises, including money laundering and tax evasion. Nevertheless,
crypto-currency reflects both the ideology and goals of capital accumulation of
neoliberals gaining popularity among speculators in the US and other countries.
Crypto-currency fulfills the neoliberal speculator’s dream by circumventing the
IMF basket of reserved currencies on which others trade while evading
regulatory constraints and all mechanisms of legal accountability for the
transfer of money and tax liability.
Indicative of the success of the neoliberal ideology’s far reaching impact
in economic life cryptocurrencies’ existence also reflects the crisis of
capitalism amid massive assaults on middle class and working class living
standards in the quest for greater capital concentration. In an ironic twist,
the very neoliberal forces that promote cryptocurrencies decry their use by
anti-Western nations – Iran, Venezuela, and Russia among others. The criticism
of anti-Western governments resorting to cryptocurrencies is based on their use
as a means of circumventing the leverage that reserve currencies like the
dollar and euro afford to the West over non-Western nations. This is only one of a few
contradictions that neoliberalism creates and undermines the system it strives
to build just as it continues to foster its ideology as the only plausible one
to pursue globally. Another contradiction is the animosity toward crypto-currencies
from mainstream financial institutions that want to maintain a monopoly on
government-issued currency which is where they make their profits. As the
world’s largest institutional promoter of neoliberalism, the IMF has cautioned
not to dismiss cryptocurrencies because they could have a future, or they may actually
‘be the future’. https://www.coindesk.com/bitcoins-unlimited-potential-lies-in-apolitical-core/; http://fortune.com/2017/10/02/bitcoin-ethereum-cryptocurrency-imf-christine-lagarde/
After the
“Washington Consensus” of 1989, IMF austerity policies are leverage to impose
neoliberal policies globally have weakened national institutions from health to
education and trade unions that once formed a social bond for workers aspiring
to an integrative socially inclusive covenant in society rather than
marginalization. The IMF uses austerity policies for debt relief as leverage
to have the government provide more favorable investment conditions and further
curtail the rights of labor with everything from ending collective bargaining
to introducing variations of “right-to-work” laws” that prohibit trade unions
from forcing collective strikes, collecting dues or signing the collective
contract. Justified in the name of ‘capitalist efficiency’, weakening organized
labor and its power of collective bargaining has been an integral part of the
neoliberal social contract as much in the US and UK as across the rest of the
world, invariably justified by pointing to labor markets where workers earn the
lowest wages. (B. M. Evans and S. McBride, Austerity: The Lived
Experience, 2017; Vicente Berdayes, John W.
Murphy, eds. Neoliberalism, Economic Radicalism, and the Normalization of Violence,
2016).
Although many in the mainstream media took notice of
the dangers of neoliberalism leading toward authoritarianism after Trump’s
election, a few faint voices have been warning about this inevitability since
the early 1990s. Susan George, president of the Transnational Institute, has
argued that neoliberalism is contrary to democracy, it is rooted in Social
Darwinism, it undermines the liberal social contract under which that people
assume society operates, but it is the system that governments and
international organization like the IMF have been promoting.
“Over the
past twenty years, the IMF has been strengthened enormously. Thanks to the debt
crisis and the mechanism of conditionality, it has moved from balance of
payments support to being quasi-universal dictator of so-called
"sound" economic policies, meaning of course neo-liberal ones. The
World Trade Organisation was finally put in place in January 1995 after long
and laborious negotiations, often rammed through parliaments which had little
idea what they were ratifying. Thankfully, the most recent effort to make
binding and universal neo-liberal rules, the Multilateral Agreement on
Investment, has failed, at least temporarily. It would have given all rights to
corporations, all obligations to governments and no rights at all to citizens.
The common denominator of these institutions is their lack of transparency and
democratic accountability. This is the essence of neo-liberalism. It claims
that the economy should dictate its rules to society, not the other way around.
Democracy is an encumbrance, neo-liberalism is designed for winners, not for
voters who, necessarily encompass the categories of both winners and losers.”
Those on the receiving end of neoliberalism’s Social Darwinist orientation
are well aware of public policy’s negative impact on their lives but they feel
helpless to confront the social contract. According to opinion polls, people
around the world realize there is a huge gap between what political and
business leaders, and international organizations claim about institutions designed
to benefit all people and the reality of marginalization. The result is loss of
public confidence in the social contract theoretically rooted in consent and
democracy. “When
elected governments break the "representative covenant" and show
complete indifference to the sufferings of citizens, when democracy is
downgraded to an abstract set of rules and deprived of meaning for much of the
citizenry, many will be inclined to regard democracy as a sham, to lose
confidence in and withdraw their support for electoral institutions.
Dissatisfaction with democracy now ranges from 40 percent in Peru and Bolivia
to 59 percent in Brazil and 62 percent in Colombia. (Boron, “Democracy or Neoliberalism”,
http://bostonreview.net/archives/BR21.5/boron.html)
Not just in developing nations operating under authoritarian capitalist
model to impose neoliberal policies, but in advanced countries people recognize
that the bourgeois freedom, democracy and justice are predicated on income.
Regardless of whether the regime operates under a pluralistic neoliberal regime
or rightwing populist one, the former much more tolerant of diversity than the
latter, the social contract goals are the same. In peoples’ lives around the
world social exploitation has risen under neoliberal policies whether imposed
the nation-state, a larger entity such as the EU, or international
organizations such as the IMF. Especially for the European and US middle class,
but also for Latin American and African nations statistics show that the
neoliberal social contract has widened the poor-rich gap.
In a world where the eight wealthiest individuals own
as much wealth as the bottom 50% or 3.6 billion people, social exploitation and
oppression has become normal because the mainstream institutions present it in
such light to the world and castigate anyone critical of institutionalized
exploitation and oppression. Rightwing populist demagogues use nationalism,
cultural conservatism and vacuous rhetoric about the dangers of big capital and
‘liberal elites’ to keep the masses loyal to the social contract by faulting
the pluralist-liberal politicians rather than the neoliberal social contract.
As the neoliberal political economy has resulted in a steady rising income gap
and downward social mobility in the past three decades, it is hardly surprising
that a segment of the masses lines behind rightwing populist demagogues walking
a thin line between bourgeois democracy and Fascism.
Seizing power from sovereign states, multinational corporation are pursuing
neoliberal policy objectives on a world scale, prompting resistance to the
neoliberal social contract which rarely class-based and invariably
identity-group oriented manifested through environmental, gender, race,
ethnicity, gay, religious and minority groups of different sorts. Regardless of
the relentless media campaign to suppress class consciousness, workers are
aware that they have common interests and public opinion studies reveal as
much. (Susan George, Shadow
Sovereigns: How Global Corporations are seizing Power, 2015)
According to the Pew Research center, the world average for satisfaction
with their governments are at 46%, the exact percentage as in the US that ranks
about the same as South Africa and much lower than neighboring Canada at 70%
and Sweden at 79%. “Publics around the globe are generally unhappy with the functioning of
their nations’ political systems. Across the 36 countries asked the question, a
global median of 46% say they are very or somewhat satisfied with the way their
democracy is working, compared with 52% who are not too or not at all satisfied.
Levels of satisfaction vary considerably by region and within regions. Overall,
people in the Asia-Pacific region are the most happy with their democracies. At
least half in five of the six Asian nations where this question was asked
express satisfaction. Only in South Korea is a majority unhappy (69%).
As confounding as it appears that elements of the disillusioned middle
class and working class opt either for the exploitation of pluralist neoliberalism
or the exploitation and oppression of rightwing populism expressed somewhat
differently in each country, it is not difficult to appreciate the immediacy of
a person’s concerns for survival like all other species above all else. The
assumption of rational behavior in the pursuit of social justice is a bit too
much to expect considering that people make irrational choices detrimental to
their best interests and to society precisely because the dominant culture has
thoroughly indoctrinated them. It seems absurd that indirectly people choose
exploitation and oppression for themselves and others in society, but they
always have as the dominant culture secular and religious indoctrinates them
into accepting exploitation and oppression. (Shaheed Nick Mohammed, Communication
and the Globalization of Culture, 2011)
Throughout Western and Eastern Europe rightwing political parties are
experiencing a resurgence not seen since the interwar era, largely because the
traditional conservatives moved so far to the right. Even the self-baptized
Socialist parties are nothing more than staunch advocates of the same
neoliberal status quo as the traditional conservatives. The US has also moved
to the right long before the election of Donald Trump who openly espouses
suppression of certain fundamental freedoms as an integral part of a
pluralistic society. As much as in the US and Europe as in the rest of the
world, analysts wonder how could any working class person champion demagogic
political leaders whose vacuous populist rhetoric promises ‘strong nation” for
all but their policies benefit the same socioeconomic elites as the neoliberal
politicians. (J. Rydgren (Ed.), Class
Politics and the Radical Right, 2012)
Rooted on classical liberal values of the Enlightenment, the political and
social elites present a social contract that is theoretically all-inclusive and
progressive, above all ‘fair’ because it permits freedom to compete, when in
reality the social structure under which capitalism operates necessarily
entails exploitation and oppression that makes marginalization very clear even
to its staunchest advocates who then endeavor to justify it by advancing
theories about individual human traits.
In 2012 the United States spent
an estimated 19.4% of GDP on such social expenditures, according to the
Organization for Economic Cooperation and Development, the Paris-based industrial
country think tank. Denmark spent 30.5%, Sweden 28.2% and Germany 26.3%. All of
these nations have a lower central government debt to GDP ratio than that of
the United States. Why the United States invests relatively less in its social
safety net than many other countries and why those expenditures are even at
risk in the current debate over debt reduction reflect Americans’ conflicted,
partisan and often contradictory views on fairness, inequality, the role and
responsibility of government and individuals in society and the efficacy of
government action. Rooted in value differences, not just policy differences,
the debate over the U.S. social contract is likely to go on long after the
fiscal cliff issue has been resolved.” http://www.pewglobal.org/2013/01/15/public-attitudes-toward-the-next-social-contract/
The
neoliberal model of capitalism spewing forth from core countries to the
periphery and embraced by capitalists throughout the world has resulted in
greater social inequality, exploitation and oppression, despite proclamations
that by pluralist-diversity neoliberals presenting themselves as remaining true
to ‘democracy’. The tilt to
the right endorsed at the ballot box by voters seeking solutions to systemic
problems and a more hopeful future indicates that some people demand exclusion
and/or punishment of minority social groups in society, as though the
exploitation and oppression of ‘the other’ would vicariously elevate the rest
of humanity to a higher plane. Although this marks a dangerous course toward
authoritarianism and away from liberal capitalism and Karl Popper’s ‘Open
Society’ thesis operating in a pluralistic world against totalitarianism, it
brings to surface the essence of neoliberalism which is totalitarian, the very
enemy Popper and his neoconservative followers were allegedly trying to
prevent. (Calvin Hayes, Popper, Hayek and the Open Society,
2009)
Social Exclusion, Popular Resistance and the Future of Neoliberalism
Social
Exclusion
Every sector of
society from the criminal justice system to elderly care has been impacted by
neoliberal social marginalization. More significant than any other aspect of
neoliberalism, the creation of a chronic debtor class without any assets is floating
a step above the structurally unemployed and underemployed. The Industrial
revolution exacerbated social exclusion producing an underclass left to its own
fate by a state that remained faithful to the social contract’s laissez
philosophy. Composed of vagrants, criminals, chronically unemployed, and people
of the streets that British social researcher Henry Mayhew described in London
Labour and the London Poor, a work published three years after the
revolutions of 1848 that shattered the liberal foundations of Europe, the
lumpenproletariat caught the attention of Karl Marx and Friedrich Engels (The
German Ideology) interested in the industrial working class movement as
the vanguard of the revolution.
Lacking a class
consciousness thus easily exploited by the elites the lumpenproletariat were a
product of industrial capitalism’s surplus labor that kept wages at or just
above subsistence levels, long before European and American trade union
struggles were able to secure a living wage. In the last four decades neoliberal
policies have created a chronic debtor working class operating under the illusion
of integration into the mainstream when in fact their debtor status not only
entails social exclusion but relegated to perpetual servitude dependence and never
climbing out of it. The neoliberal state is the catalyst to the creation of
this new class. https://www.bloomberg.com/news/articles/2016-07-20/a-164-year-old-idea-helps-explain-the-huge-changes-sweeping-the-world-s-workforce
In an essay entitled “Labour
Relations and Social Movements in the 21st Century”
Portuguese social scientists Elísio Estanque and Hermes Augusto Costa argue
that the manner that neoliberalism has impacted Europe’s social structure in
both core and periphery countries has given rise to the new precarious working class,
often college-degreed, overqualified, and struggling to secure steady
employment especially amid recessionary cycles that last longer and run deeper.
“The panorama of a deep
economic crisis which in the last few decades has hit Europe and its Welfare
state in particular has had an unprecedented impact on employment and social
policies. The neoliberal model and the effects of deregulated and global finance
not only question the “European social model” but push sectors of the labour
force – with the youngest and well-qualified being prominent – into
unemployment or precarious jobs. …the sociological and potential
socio-political significance of these actions particularly as a result of the
interconnections that such movements express, both in the sphere of the
workplace and industrial system or whether with broader social structures, with
special emphasis on the middle classes and the threats of 'proletarianization'
that presently hang over them. … labour relations of our time are crossed by
precariousness and by a new and growing “precariat” which also gave rise to new
social movements and new forms of activism and protest.” http://cdn.intechopen.com/pdfs/34149/InTech-Labour_relations_and_social_movements_in_the_21st_century.pdf
‘Proletarization’ of the declining middle class and
downward income pressure for the working class and middle class has been
accompanied by the creation of a growing chronic debtor class in the Western
World. Symptomatic of the neoliberal globalist world order, the creation of the
debtor class and more broadly social exclusion transcends national borders, ethnicity,
gender, culture, etc. Not just at the central government level, but at the
regional and local levels, public policy faithfully mimics the neoliberal model
resulting in greater social exclusion while there is an effort to convince people
that there is no other path to progress although people were free to search; a
dogma similar to clerical intercession as the path to spiritual salvation. http://www.isreview.org/issues/58/feat-economy.shtml
The neoliberal path to salvation has resulted in a
staggering 40% of young adults living with relatives out of financial necessity.
The number has never been greater at any time in modern US history since the
Great Depression, and the situation is not very different for Europe. Burdened with debt, about half of the unemployed youth are unable to
find work and most that work do so outside the field of their academic
training. According to the OECD, youth unemployment in the US is not confined
only to high school dropouts but includes college graduates. Not just across
southern Europe and northern Africa, but in most countries the neoliberal
economy of massive capital concentration has created a new lumpenproletariat that
has no assets and carries debt. Owing to neoliberal policies, personal
bankruptcies have risen sharply in the last four decades across the Western
World reflecting the downward social mobility and deep impact on the
chronically indebted during recessionary cycles. https://www.theatlantic.com/business/archive/2012/04/53-of-recent-college-grads-are-jobless-or-underemployed-how/256237/; https://www.cbsnews.com/news/for-young-americans-living-with-their-parents-is-now-the-norm/; Iain Ramsay, Personal Insolvency in the 21st
Century: A Comparative Analysis of the US and Europe, 2017)
Historically, the safe assumption has been that
higher education is the key to upward social mobility and financial security,
regardless of cyclical economic trends. However, the laws of overproduction
apply not only to commodities but to the labor force, especially as the
information revolution continues to chip away at human labor. College education
is hardly a guarantee to upward social mobility, but often a catalyst to descent
into the debtor unemployed class, or minimum wage/seasonal part time job or
several such jobs. The fate of the college-educated falling into the chronic
debtor class is part of a much larger framework, namely the ‘financialization’
of the economy that is at the core of neoliberalism. ( Vik Loveday, “Working-class participation, middle-class
aspiration? Value, upward mobility and symbolic indebtedness in higher
education.” The Sociological Review, September 2014)
Beyond the simplistic suggestion of ‘more training’
to keep up with tech changes, the root cause of social exclusion and the
chronic debtor class revolves around the ‘financialization’ of the neoliberal
globalist economy around which central banks make monetary policy. Since the
beginning of the Thatcher-Reagan era, advanced capitalist countries led by the
US conducted policy to promote the centrality of financial markets as the core
of the economy. This entails resting more on showing quarterly profit even at
the expense of taking on debt, lower productivity and long-term sustainability,
or even breaking a company apart and dismissing workers because it would add
shareholder value. Therefore, the short-term financial motives and projection
of market performance carry far more weight than any other consideration.
Symptomatic of a combination of deregulation and the
evolution of capitalism especially in core countries from productive to speculative,
financialization has transformed the world economy. Enterprises from insurance
companies to brokerage firms and banks like Goldman Sachs involved in legal and
quasi-legal practices, everything from the derivatives market to helping convert
a country’s sovereign debt into a surplus while making hefty profits has been
part of the financialization economy that speeds up capital concentration and
creates a wider rich-poor gap. Housing, health, pension systems, health care
and personal consumption are all impacted by financialization that concentrates
capital through speculation rather than producing anything from capital goods
to consumer products and services. (Costas Lapavitsas, The Financialization of Capitalism: 'Profiting without producing' http://www.tandfonline.com/doi/full/10.1080/13604813.2013.853865
Billionaire
speculator George Soros has observed that market speculation not only drives
prices higher, especially of commodities on a world scale, but the
inevitability of built-in booms and busts are disruptive simply because a small
group of people have secured a legal means for capital accumulation. At the
outbreak of the US stock market collapse followed by the ‘great recession’ of
2008, the European Network and Debt and
Development (EURODAD) published an article critical of financialization and
its impact on world hunger.
“Do you enjoy rising prices? Everybody talks about
commodities – with the Agriculture Euro Fund you can benefit from the increase
in value of the seven most important agricultural commodities.” With this
advertisement the Deutsche Bank t tried
in spring 2008 to attract clients for one of its investment funds. At the same
time, there were hunger revolts in Haiti, Cameroon and other developing
countries, because many poor could no longer pay the exploding food prices. In
fact, between the end of 2006 and March 2008 the prices for the seven most
important commodities went up by 71 per cent on average, for rice and grain the
increase was 126 per cent. The poor are most hit by the hike in prices. Whereas
households in industrialised countries spend 10 -20 per cent for food, in
low-income countries they spend 60 - 80 per cent. As a result, the World Bank
forecasts an increase in the number of people falling below the absolute
poverty line by more than 100 million. Furthermore, the price explosion has
negative macroeconomic effects: deterioration of the balance of payment,
fuelling inflation and new debt.” http://eurodad.org/uploadedfiles/whats_new/news/food%20speculation%202%20pager%20final.pdf
Someone has to pay
for the speculative nature of financialization, and the labor force in all
countries is the first to do so through higher indirect taxes, cuts in social
programs and jobs and wages for the sake of stock performance. Stock markets around
which public policy is conducted have eroded the real economy while molding a
culture of financialization of the last two generations a large percentage of
which has been swimming in personal debt reflecting the debt-ridden
financialization economy. Contrary to claims by politicians, business leaders
and the media that the neoliberal system of financialization is all about
creating jobs and helping to diffuse income to the middle class and workers, the
only goal of financialization is wealth concentration while a larger debtor
class and social marginalization are the inevitable results. It is hardly
surprising that people world-wide believe the political economy is rigged by
the privileged class to maintain its status and the political class is the
facilitator. http://www.truth-out.org/opinion/item/41359-financialization-has-turned-the-global-economy-into-a-house-of-cards-an-interview-with-gerald-epstein; Costas Lapavitsa, Financialization in Crisis, 2013; Rona Foroohar, Makers and Takers: How Wall Street Destroyed
Main Street, 2016)
Despite efforts by pluralist and populist neoliberals throughout
the world to use ‘culture wars’ and identity politics as distraction while
deemphasizing the role of the state as the catalyst in the neoliberal social
contract, the contradictions that the political economy exposes the truth about
the socially unjust society that marginalizes the uneducated poor and college-educated
indebted alike. Not to deemphasize the significance of global power
distribution based on the Westphalian nation-state model and regional blocs
such as the European Union, but neoliberals are the ones who insist on the
obsolete nation-state that the international market transcends, thus acknowledging
the preeminence of capitalism in the social contract and the subordination of
national sovereignty to international capital and financialization of the
economy. After all, the multinational corporation operating in different
countries is accountable only to its stockholders, not to the nation-state
whose role is to advance corporate interests.
No matter how rightwing populists try to distract
people from the real cause of social exclusion and marginalization by focusing on
nationalist rhetoric, marginalized social groups and Muslim or Mexican legal or
illegal immigrants have no voice in public policy but financialization
speculators do. In an article entitled “The Politics of Public Debt: Neoliberalism, capitalist development, and
the restructuring of the state”, Wolfgang Streeck concludes
that neoliberalism’s systemic rewards provide a disincentive for capitalists to
abandon financialization in favor of productivity. “Why should the new oligarchs be
interested in their countries’ future productive capacities and present
democratic stability if, apparently, they can be rich without it, processing
back and forth the synthetic money produced for them at no cost by a central
bank for which the sky is the limit, at each stage diverting from it hefty fees
and unprecedented salaries, bonuses and profits as long as it is forthcoming —
and then leave their country to its remaining devices and withdraw to some
privately owned island?
An important difference between pluralists and
rightwing populists in their approach to the state’s role is that the former
advocate for a strong legislative branch and weaker executive, while rightwing
populists want a strong executive and weak legislative. However, both political
camps agree about advancing market hegemony nationally and internationally and
both support policies that benefit international and domestic capital, thus
facilitating the convergence of capitalist class interests across national
borders with the symptomatic results of social exclusion. (http://www.sciencedirect.com/science/article/pii/S0016718508000924; Vicente Navarro, “The Worldwide
Class Struggle” https://monthlyreview.org/2006/09/01/the-worldwide-class-struggle/
Regardless
of vacuous rhetoric about a weak state resulting from neoliberal policies, the
state in core countries where financialization prevails has been and remains
the catalyst for class hegemony as has been the case since the nascent stage of
capitalism. Both Margaret Thatcher and Ronald Reagan strengthened the corporate
welfare state while openly declaring war against trade unions and by extension
on the working class that neoliberals demonize as the enemy of economic
progress. As statistics below illustrate, the debtor class expanded rapidly
after 1980 when the financialization economy took off, reaching its highest
point after the subprime-induced great recession in 2008. Under neoliberal
globalist policies, governments around the world followed the Reagan-Thatcher
model to facilitate over-accumulation of capital in the name of competition. (Montgomerie
Johnna, Neoliberalism and the Making of the Subprime Borrower, 2010)
Whether the
state is promoting neoliberal policies under a pluralist or authoritarian
models, the neoliberal culture has designated labor as the unspoken enemy,
especially organized labor regardless of whether the ruling parties have
co-opted trade unions. In the struggle for capital accumulation under parasitic
financialization policies, the state’s view of labor as the enemy makes social
conflict inevitable despite the obvious contradiction that the ‘enemy-worker’
is both the mass consumer on whom the economy depends for expansion and development.
Despite this contradiction, neoliberals from firms such as Goldman Sachs has many
of its former executives not just in top positions of the US government but
world-wide, no matter who is in power. Neoliberal policy resulting in social
exclusion starts with international finance capitalism hiding behind the
pluralist and rightwing populist masks of politicians desperately vying for
power to conduct public policy.
Just as the serfs
were aware in the Middle Ages that Lords and Bishops determined the fate of all
down here on earth before God in Heaven had the last word, people today realize
the ubiquitous power of capitalists operating behind the scenes, and in some
case as with Trump in the forefront of public-policy that results in social
exclusion and rising inequality in the name of market fundamentalism promising
to deliver the benefits to all people. Neoliberalism has created a chronic
debtor class that became larger after the 2008 recession and will continue
growing with each economic contracting cycle in decades to come. Despite its
efforts to keep one step ahead of bankruptcy, the identity of the new chronic
debtor class rests with the neoliberal status quo, often with the rightwing
populist camp that makes rhetorical overtures to the frustrated working class that
realize financialization benefits a small percentage of wealthy individuals.
Personal debt has
skyrocketed, reaching $12.58 trillion in the US in 2016, or 80% of GDP. The
irony is that the personal debt level is 2016 was the highest since the great
recession of 2008 and it is expected to continue much higher, despite the economic
recovery and low unemployment. Wage stagnation and higher costs of health,
housing and education combined with higher direct and indirect taxes to keep
public debt at manageable levels will continue to drive more people into the
debtor class. Although some European countries such as Germany and France have
lower household debt relative to GDP, all advanced and many developing nations
have experienced a sharp rise in personal debt because of deregulation,
privatization, and lower taxes on the wealthy with the burden falling on the
mass consumer. Hence the creation of a permanent debtor class whose fortunes
rest on maintaining steady employment and/or additional part-time employment to
meet loan obligations and keep one step ahead of declaring bankruptcy. Austerity
policies imposed either by the government through tight credit in advanced
capitalist countries or IMF loan conditionality in developing and
semi-developed nations the result in either case is lower living standards and
a rising debtor class. http://fortune.com/2017/02/19/america-debt-financial-crisis-bubble/
Maurizio Lazzarato's The Making of the Indebted Man: An Essay on
the Neoliberal Condition argues that neoliberalism has created a
debtor-creditor relationship which has supplanted the worker-capitalist
dichotomy, an argument that others focusing on the financialization of the
economy have made as well. Although in Keynesian economics public and private
debt was a stimulant for capitalist growth amid the contracting cycle of the
economy, the neoliberal era created the permanent chronic debtor class that
finds it difficult to extricate itself from that status. Evident after the deep
recession of the subprime-financialization-induced recession in 2008, this
issue attracted the attention of some politicians and political observers who
realized the convergence of the widening debtor class with the corresponding widening
of the rich-poor income gap.
By making both private and public
debt, an integral part of the means of production, the neoliberal system has
reshaped social life and social relationships because the entire world economy
is debt-based. Servicing loans entails lower living standards for the working
class in advanced capitalist countries, and even lower in the rest of the world,
but it also means integrating the debtor into the system more closely than at
any time in history. While it is true that throughout the history of
civilization human beings from China and India to Europe have used various
systems of credit to transact business (David Graeber, Debt: the First 5000 Years,
2014), no one would suggest reverting back to debt-slavery as part of the
social structure. Yet, neoliberalism has created the ‘indebted man’ as part of
a policy that has resulted in social asymmetrical power, aiming to speed up capital
accumulation and maintain market hegemony in society while generating greater
social exclusion. https://marxandphilosophy.org.uk/reviewofbooks/reviews/2013/87E0
Ever since the British Abolition of
the Slave Trade Act in 1807, followed by a number of other European governments
in the early 1800s, there was an assumption that slave labor is inconsistent
with free labor markets as well as with the liberal social contract rooted in
individual freedom. Nevertheless, at the core of neoliberal capitalism US consumer
debt as of October 2017 stood at $3.8 trillion in a 419 trillion economy. Debt-to-personal
income ratio is at 160%; college student debt runs at approximately $1.5
trillion, with most of that since 2000; mortgage debt has tripled since 1955,
with an alarming 8 million people delinquent on their payments and the foreclosure
rate hovering at 4.5% or three times higher than postwar average; consumer debt
has risen 1,700 since 1971 to above $1 trillion, and roughly half of Americans
are carrying monthly credit debt with an average rate of 14%. The debt problem
is hardly better for Europe where a number of countries have a much higher
personal debt per capita than the US. In addition to personal debt, public debt
has become a burden on the working class in so far as neoliberal politicians and
the IMF are using as a pretext to impose austerity conditions, cut entitlements
and social programs amid diminished purchasing power because of inflationary
asset values and higher taxes. https://www.thebalance.com/consumer-debt-statistics-causes-and-impact-3305704; https://www.nytimes.com/2017/05/17/business/dealbook/household-debt-united-states.html
While personal debt is often but not
always a reflection of a consumerist society, personal debt encompasses
everything from education to health care costs in times when the
digital/artificial intelligence economy is creating a surplus labor force that
results in work instability and asymmetrical social relations. Technology-automation-induced
unemployment driving down living standards creates debtor-workers chasing the technology
to keep up with debt payments in order to survive until the next payment is due.
Considering the financial system backed by a legal framework is established to
favor creditors, especially given the safeguards and protections accorded to
creditors in the past four decades, there are many blatant and overt ways that
the state uses to criminalize poverty and debt. In 2015, for example, Montana
became the first state not to take the driver’s license of those delinquent on
their student debt, thus decriminalizing debt in this one aspect, though hardly
addressing the larger issue of the underlying causes of debt and social
exclusion. https://academiccommons.columbia.edu/catalog/ac:4b8gtht779; https://lumpenproletariat.org/tag/neoliberalism/
In an article
entitled “Torturing the Poor,
German-Style”, Thomas Klikauer stressed that the weakening of the social
welfare state took place under the Social Democratic Party (SPD)-Green Party
coalition (1998-2005) government pursuing pluralist neoliberal policies. Although
historically the SPD had forged a compromise that would permit for the social
inclusion of labor into the institutional mainstream, by the 1990s, the SPD
once rooted in socialism had fully embraced neoliberalism just as the British
Labour Party and all socialist partiers of Europe pursuing social exclusion.
Klilauer writes: “Germany’s chancellor [Gerhard]
Schröder (SPD) –known as the “Comrade of the Bosses”– no longer sought to integrate
labour into capitalism, at least not the Lumpenproletariat or precariate. These
sections of society are now deliberately driven into mass poverty, joining the
growing number of working poor on a scale not seen in Germany perhaps since the
1930s.” https://www.counterpunch.org/2017/10/20/torturing-the-poor-german-style/
No different
than working class people in other countries need more than one job to keep up
with debt and living expenses, so do three million Germans (rising from 150,000
in 2003) that have the privilege of living in Europe’s richest nation. Just as
the number of the working poor has been rising in Germany, so have they across
the Western World. Social exclusion and the expansion of the debtor class in
Germany manifested itself in the national elections of 2017 where for the first
time since the interwar era a political party carrying the legacy of Nazism,
the Alternative fur Deutchland (AfD),
founded by elite ultra-conservatives, captured 13% of the vote to become
third-largest party and giving a voice of neo-Nazis who default society’s
neoliberal ills to Muslims and immigrants. Rejecting the link between market
fundamentalism that both the SPD and German conservatives pursued in the last
three decades, neoliberal apologists insist that the AfD merely reflects a
Western-wide anti-Muslim trend unrelated to social exclusion and the policies
that have led to Germany’s new lumpenproletariat and working poor. https://crimethinc.com/2017/10/01/the-rise-of-neo-fascism-in-germany-alternative-fur-deutschland-enters-the-parliament; https://www.jku.at/icae/content/e319783/e319785/e328125/wp59_ger.pdf
Interestingly,
US neoliberal policies also go hand-in-hand with Islamophobia and the war on
terror under both Democrat and Republican administrations, although the
pluralist-diversity neoliberals have been more careful to maintain a
politically-correct rhetoric. Just as in Germany and the rest of Europe, there
is a direct correlation in the US between the rise in social exclusion of Muslim
and non-Muslim immigrants and minorities and the growing trend of rightwing
populism. There is no empirical foundation to arguments that rightwing populism
whether in Germany or the US has no historical roots and it is unconnected both
to domestic and foreign policies. Although the neoliberal framework in which
rightwing populism operates and which creates social exclusion and the new
chronic debtor class clashes with neoliberal pluralism that presents itself as
democratic, structural exploitation is built into the social contract thus
generating grassroots opposition.
Grassroots
Resistance to Neoliberalism
Even before the great
recession of 2008, there were a number of grassroots groups against neoliberal
globalism both in advanced and developing nations. Some found expression in
social media, others at the local level focused on the impact of neoliberal
policies in the local community, and still others attempted to alter public
policy through cooperation with state entities and/or international
organizations. The most important anti-neoliberal grassroots organizations have
been in Brazil (Homeless Workers’
Movement and Landless Workers’ Movement), South Africa (Abahlali baseMjondolo, Western Cape Anti-Eviction Campaign, Landless
Peoples’ Movement), Mexico (Ejército Zapatista de Liberación Nacional, EZLN), Haiti (Fanmi Lavalas) and
India (Narmada Bachao Andolan).
The vast
majority of organizations claiming to be fighting against neoliberal policies
are appendages either of the pluralist or the rightwing populist political camp
both whose goal is to co-opt the masses as part of their popular base. The
anti-globalization movement and by implication anti-neoliberal includes
elements from the entire political spectrum from left to ultra-right. From India, to Bangladesh, from South Africa to Brazil, and
from the US, France, and the UK, working class resistance to neoliberal
globalism has been directly or indirectly co-opted and often de-politicized by
corporate-funded or government-funded NGOs and by ‘reformist’ local and
international organizations.
By
promoting measures invariably in the lifestyle domain but also some social
welfare and civil rights issues such as women’s rights, renter’s rights, etc,
the goals of organizations operating within the neoliberal structure is not
social inclusion by altering the social contract, but sustaining the status quo
by eliminating popular opposition through co-optation. It is hardly a
coincidence that the rise of the thousands of NGOs coincided with the rise of
neoliberalism in the 1990s, most operating under the guise of aiding the poor,
protecting human rights and the environment, and safeguarding individualism. Well-funded
by corporations, corporate foundations and governments, NGOs are the equivalent
of the 19th century missionaries, using their position as ideological
preparatory work for Western-imposed neoliberal policies. http://socialistreview.org.uk/310/friends-poor-or-neo-liberalism; https://zeroanthropology.net/2014/08/28/civil-society-ngos-and-saving-the-needy-imperial-neoliberalism/
On
the receiving end of corporate and/or government-funded NGOs promoting the
neoliberal agenda globally, some leading grassroots movements that advocate
changing the neoliberal status quo contend that it is better to ‘win’ on a
single issue such as gay rights, abortion, higher minimum wage, etc. at the
cost of co-optation into neoliberal system than to have nothing at all looking
in from the outside. Their assumption is that social exclusion can be mitigated
one issue at a time through reform from within the neoliberal institutional
structure that grassroots organizations deem as the enemy. This is exactly what
the pluralist neoliberals are promoting as well to co-opt grassroots opposition
groups.
Partly because governmental and non-governmental
organizations posing as reformist have successfully co-opted grassroots
movements often incorporating them into the neoliberal popular base, popular
resistance has not been successful despite social media and cell phones that
permit instant communication. This was certainly the case with the Arab Spring
uprisings across North Africa-Middle East where genuine popular opposition to
neoliberal policies of privatization, deregulation impacting everything from
health care to liberalizing rent controls led to the uprising. In collaboration
with the indigenous capitalists, political and military elites, Western
governments directly and through NGOs were able to subvert and then revert to
neoliberal policies once post-Arab Spring regimes took power in the name of
‘reform’ invariably equated with neoliberal policies. https://rs21.org.uk/2014/10/06/adam-hanieh-on-the-gulf-states-neoliberalism-and-liberation-in-the-middle-east/
In “Dying for Growth: Global Inequality and the Health of the Poor” Jim
Yong Kim ed., 2000) contributing authors illustrate in case studies of several
countries how the neoliberal status quo has diminished the welfare of billions
of people in developing nations for the sake of growth that simply translates
into even greater wealth concentration and misery for the world’s poor.
According to the study: “100 countries
have undergone grave economic decline over the past three decades. Per capita
income in these 100 countries is now lower than it was 10, 15, 20 or in some
cases even 30 years ago. In Africa, the average household consumes 20 percent
less today than it did 25 years ago. Worldwide, more than 1 billion people saw
their real incomes fall during the period 1980-1993.”http://www.mit.edu/~thistle/v13/2/imf.html
Anti-neoliberal groups assume different forms,
depending on the nation’s history, social and political elites, the nature of
institutions and the degree it has been impacted by neoliberal policies that
deregulate and eliminate as much of the social safety net as workers will
tolerate. Even the BRICS (Brazil, Russia, India, China and South Africa) that
experienced rapid growth from the early 1990s until the great recession of 2008
have not escaped mass opposition to neoliberalism precisely because the impact
on workers and peasants has been largely negative. https://www.cpim.org/views/quarter-century-neo-liberal-economic-policies-unending-distress-and-peasant-resistance; Juan Pablo Ferrero, Democracy against Neoliberalism in Argentina
and Brazil, 2014; Mimi Abramovitz and Jennifer Zelnick, “Double Jeopardy: The Impact of Neoliberalism
on Care Workers in the United States and South Africa”, http://journals.sagepub.com/doi/abs/10.2190/HS.40.1.f
Grassroots organizations opposed to policies that
further integrate their countries into the world economy and marginalize the
working class have been especially persistent in South Africa, Brazil, and
India. To assuage if not co-opt the masses the BRICS followed a policy mix that
combines neoliberalism, aspects of social welfare and statism. Combined with
geopolitical opposition to US-NATO militarism and interventionism, the BRICS
policies were an attempt to keep not just the national bourgeois loyal but the
broader masses by projecting a commitment to national sovereignty.
In Brazil, India and South Africa internal and
external corporate pressure along with US, EU, and IMF-World Bank pressures
have been especially evident to embrace neoliberal policies and confront
grassroots opposition rather than co-opt it at the cost of making concessions
to labor. Considering that the development policies of the BRICS in the last
three decades of neoliberal globalism accommodated domestic and foreign capital
and were not geared to advance living standards for the broader working class
and peasantry, grassroots opposition especially in Brazil, India and South
Africa where the state structure is not nearly as powerful as in Russia and
China manifested itself in various organizations.
One of the grassroots organizations managing to keep
its autonomy is Brazil’s Landless Workers Movement (MST) skillfully
remaining independent of both former President Luiz Inacio Lula da Silva and Dilma
Rousseff. Although the MST supported some policies of the former presidents who
presented themselves as champions of labor rather than capital, both Lula and
Rousseff made substantial policy compromises with the neoliberal camp and were eventually
implicated in corruption scandals revealing opportunism behind policy-making.
While the record of their policies on the poor speaks for itself, the
Lula-Rousseff era of Partido dos Trabalhadores was an improvement
over previous neoliberal president Fernando Henrique Cardoso (1995-2003). https://monthlyreview.org/2017/02/01/the-brazilian-crisis/
The MST persisted with the struggle against neoliberal
policies that have contributed to rising GDP heavily concentrated among the
national and comprador bourgeoisie and foreign corporations. Other Latin
American grassroots movements have had mixed results not much better than those
in Brazil. Ecuador under president Rafael Correa tried to co-opt the left by
yielding on some policy issues as did Lula and Rousseff, while pursuing a
neoliberal development model as much as his Brazilian counterparts. With its
economy thoroughly integrated into the US economy, Mexico is a rather unique
case where grassroots movements against neoliberalism are intertwined with the
struggle against official corruption and the narco-trade resulting in the
assassination of anti-neoliberal, anti-drug activists. (William Aviles, The
Drug War in Mexico: Hegemony and Global Capitalism;
Anti-neoliberal resistance in the advanced countries
has not manifested itself as it has in the developing nations through leftist
movements such as South Africa’s Abahlali
baseMjondolo or Latin American trade unions that stress a working
class philosophy of needs rather than the one of rights linked to middle class
property and identity politics. https://roarmag.org/essays/south-africa-marikana-anc-poor/ Popular resistance to neoliberalism in the US has been part of the
anti-globalization movement that includes various groups from environmentalists
to anti-IMF-World Bank and anti-militarism groups.
Although there are some locally based groups like East
Harlem-based Justice in El Barrio representing immigrants and low-income
people, there is no national anti-neoliberal movement. Perhaps because of the
war on terror, various anti-establishment pro-social justice groups assumed the
form of bourgeois identity politics of both the Democratic Party and the
Republican where some of the leaders use rightwing populism as an ideological
means to push through neoliberal policies while containing grassroots anger
resulting from social exclusion and institutional exploitation. https://www.dissentmagazine.org/blog/the-legacy-of-anti-globalization
Black Lives Matter revolving around the systemic racism issue and Occupy Wall Street anti-capitalist
group fell within the left orbit of the Democratic Party (Senator Bernie
Sanders) who is an advocate of the pluralist-diversity model, opposes market
fundamentalism, and proposes maintaining some vestiges of the Keynesian welfare
state. With the exception of isolated voices by a handful of academics and some
critics using social media as a platform, there is no anti-neoliberal
grassroots movement that Democrats or Republicans has not successfully co-opted.
Those refusing to be co-opted are invariably dismissed as everything from
idealists to obstructionists. Certainly there is nothing in the US like the anti-neoliberal
groups in Brazil, India, Mexico, or South Africa operating autonomously and
resisting co-optation by political parties. The absence of such movements in
the US is a testament to the strong state structure and the institutional power
of the elites in comparison with many developing nations and even some parts of
Europe. https://www.salon.com/2015/08/15/black_lives_matter_joins_a_long_line_of_protest_movements_that_have_shifted_public_opinion_most_recently_occupy_wall_street/
As an integrated economic bloc, Europe follows uniform
neoliberal policies using as leverage monetary and trade policy but also the
considerable EU budget at its disposal for subsidies and development. A number
of European trade unions and leftist popular groups fell into the trap of
following either Socialist or centrist parties which are pluralist neoliberal
and defend some remnants of Keynesianism. Those disillusioned with mainstream
Socialist Parties pursue the same neoliberal policies of social exclusion as
the conservatives fell in line behind newly formed non-Communist reformist parties
(PODEMOS in Spain, SYRIZA in Greece, for example) with a Keynesian platform and
socialist rhetoric.
As the government of Greek Prime Minister Alexis
Tsipras proved once in power in 2015, self-baptized ‘leftist’ parties are leftist
in rhetoric only. When it comes to policy they are as neoliberal as the
opposition they criticize; even more dangerous because they have deceived
people to support them as the alternative to neoliberal conservatives. Because
grassroots movements and the popular base of political parties that promise
‘reform’ to benefit the masses are co-opted by centrists, center-left or
rightwing political parties, social exclusion becomes exacerbated leading to
disillusionment.
Consequently, people hoping for meaningful change
become apathetic or they become angry and more radicalized often turning to
rightwing political parties. Although there is a long-standing history of
mainstream political parties co-opting grassroots movements, under
neoliberalism the goal is to shape them into an identity politics mold under
the pluralist or rightwing populist camp. Behind the illusion of choice and
layers of bourgeois issues ranging from property rights and individual rights
rests a totalitarian system whose goal is popular compliance. https://www.opendemocracy.net/uk/eliane-glaser/elites-right-wing-populism-and-left;
‘De-democratization’ under
Neoliberalism
More subtly and stealthily interwoven into the
institutional structure than totalitarian regimes of the interwar era,
neoliberal totalitarianism has succeeded not because of the rightwing populist political
camp but because of the pluralist one that supports both militarism in foreign
affairs and police-state methods at home as a means of maintaining the social
order while projecting the façade of democracy. Whereas the neoliberal
surveillance state retains vestiges of pluralism and the façade of electoral
choice, the police state in interwar Germany and Italy pursued blatant
persecution of declared ideological dogmatism targeting ‘enemies of the state’
and demanding complete subjugation of citizens to the regime. Just as people
were manipulated in interwar Europe into accepting the totalitarian state as desirable
and natural, so are many in our time misguided into supporting neoliberal
totalitarianism.
In her book
entitled Undoing the Demos: Neoliberalism's Stealth Revolution
(2015), Wendy Brown argues that not just in the public sector, but in every
sector of society neoliberal ideology of ‘de-democratization’ prevails.
Extensions of a hierarchical economic system rather than citizens with civil and
human rights guaranteed by a social contract aimed at the welfare of the
collective, human beings are more commoditized today than they were in the
nascent phase of industrial capitalism. The kind of ubiquitous transformation
of the individual’s identity with the superstructure and the ‘de-democratization’
of society operating under massively concentrated wealth institutionally intertwined
with political power in our contemporary era was evident in totalitarian countries
during the interwar era.
Whereas protest and resistance,
freedom of expression and assembly were not permitted by totalitarian regimes
in interwar Europe, they are permitted in our time. However, they are so
marginalized and/or demonized when analyzing critically mainstream institutions
and the social contract under which they operate that they are the stigmatized as
illegitimate opposition. Permitting freedom of speech and assembly, along with
due process and electoral politics best serves neoliberal socioeconomic totalitarianism
because its apologists can claim the system operates in an ‘open society’; a
term that Karl Popper the ideological father of neo-conservatism coined to
differentiate the West from the former Communist bloc closed societies.
As Italian journalist Claudio Hallo put
it: “If the core of neoliberalism is a
natural fact, as suggested by the ideology already embedded deep within our
collective psyche, who can change it? Can you live without breathing, or stop
the succession of days and nights? This is why Western democracy chooses among
the many masks behind which is essentially the same liberal party. Change is
not forbidden, change is impossible. Some consider this feature to be an
insidious form of invisible totalitarianism.” https://www.rt.com/op-edge/171240-global-totalitarianism-change-neoliberalism/
In an essay entitled “The unholy alliance of neoliberalism and postmodernism”, Hans van
Zon argues that as the Western World’s dominant ideologies since the 1980s, “undermine the immune system of society,
neoliberalism by commercialization of even the most sacred domains and
postmodernism by its super-relativism and refusal to recognize any hierarchy in
value or belief systems.” http://www.imavo.be/vmt/13214-van%20Zon%20postmodernism.pdf. Beyond undermining society’s immune system and the
open society under capitalism, as Hans van Zon contends, the convergence of
these ideologies have contributed to the ‘de-democratization’
of society, the creation of illiberal institutions and collective consciousness
of conformity to neoliberal totalitarianism. The success of neoliberalism
inculcated into the collective consciousness is partly because of the
long-standing East-West confrontation followed by the manufactured war on
terror. However, it is also true that neoliberal apologists of both the
pluralist and rightwing camp present the social contract as transcending
politics because markets are above states, above society as ‘objective’ thus
they can best determine the social good on the basis of commoditized value. (Joshua
Ramsay, “Neoliberalism as Political
Theology of Chance: the politics of divination.” https://www.nature.com/articles/palcomms201539
An evolutionary course, the ‘de-democratization’ of society started in postwar
US that imposed transformation policy on the world with the goal of maintaining
its economic, political, military and cultural superpower hegemony justified in
the name of anti-Communism. Transformation policy was at the root of the
diffusion of the de-democratization process under neoliberalism, despite the
European origin of the ideology. As it gradually regained its status in the
core of the world economy after the creation of the European Economic Community
(EEC) in 1957, northwest Europe followed in the path of the US. http://www.eurstrat.eu/the-european-neoliberal-union/
Ten years before the Treaty of Rome that created the EEC, Austrian
economist Friedrich Hayek gathered a number of scholars in Mont Pelerin where
they founded the neoliberal society named after the Swiss village. They
discussed strategies of influencing public policy intended to efface the
Keynesian model on which many societies were reorganized to survive the Great
Depression. Financed by some of Europe’s wealthiest families, the Mont Pelerin
Society grew of immense importance after its first meeting which coincided with
the anti-labor Taft-Hartley Act, the Truman Doctrine formalizing the
institutionalization of the Cold War, and the Marshall Plan intended to
reintegrate Europe and its colonies and spheres of influence under the aegis of
the US. Helped along by the IMF, World Bank, and the International Agreement on
Tariffs and Trade established in 1947, US transformation policy was designed to
shape the world to its own geopolitical and economic advantage based on a
neo-classical macroeconomic and financial theoretical model on which neoliberal
ideology rested. http://fpif.org/from_keynesianism_to_neoliberalism_shifting_paradigms_in_economics/
Considering that
millionaires and billionaires provide funding for the Mont Pelerin Society and
affiliates, this prototype neoliberal think tank became the intellectual pillar
of both the pluralist and rightwing neoliberal camps by working with 460 think
tanks that have organizations in 96 countries where they influence both
centrist and rightwing political parties. Whether Hillary Clinton’s and
Emmanuel Macron’s pluralist neoliberal globalist version or Donald Trump’s and
Narendra Modi’s rightwing populist one, the Mont Pelerin Society and others
sharing its ideology and goals exercise preeminent policy influence not on the
merit of its ideas for the welfare of society but because the richest people
from rightwing Czech billionaire Andrej Babis to liberal pluralist billionaires
either support its principles and benefit from their implementation into policy.
(J. Peterson, Revoking the Moral Order: The Ideology of Positivism and
the Vienna Circle, 1999; https://www.theguardian.com/commentisfree/2016/nov/09/rise-of-the-davos-class-sealed-americas-fate
If the
neoliberal social contract is the answer to peoples’ prayers world-wide as
Hayek’s followers insist, why is there a need on the part of the state,
international organizations including UN agencies, billionaire and
millionaire-funded think tanks, educational institutions and the corporate and
state-owned media to convince the public that there is nothing better for society
than massive capital concentration and social exclusion, and social conditions
that in some respects resemble servitude in Medieval Europe? Why do
ultra-rightwing Koch brothers and the Mercer family, among other billionaires and
millionaires from North America, Europe, India, South Korea and Latin America spend
so much money to inculcate the neoliberal ideology into the collective
consciousness and to persuade the public to elect neoliberal politicians either
of the pluralist camp or the authoritarian one?
Seventy years after Hayek formed the Mont Leperin
Society to promote a future without totalitarianism, there are elected
neoliberal politicians from both the pluralist and authoritarian camps with
ties to big capital and organized crime amid the blurring lines between legal
and illegal economic activities that encompasses everything from
crypto-currency and insider trading to offshore ‘shell corporations’ and banks laundering
money for drug lords and wealthy tax evaders. Surrender of popular sovereignty
through the social contract now entails surrender to a class of people who are
criminals, not only based on a social justice criteria but on existing law if
it were only applied to them as it does to petty thieves. In the amoral
Machiavellian world of legalized “criminal virtue” in which we live these are
the leaders of society. Indicative of the perversion of values now rooted in
atomism and greed, the media reports with glowingly admiring terms that in 2017
the world’s 500 richest people became richer by $1 trillion, a rise that
represents one-third of Africa’s GDP and just under one-fifth of Latin
America’s. Rather than condemning mal-distribution of income considering what
it entails for society, the media and many in the business of propagating for
neoliberalism applaud appropriation within the legal framework of the social
contract as a virtue. http://www.hindustantimes.com/business-news/500-richest-people-became-1-trillion-richer-in-2017-mukesh-ambani-tops-indian-list/story-JcNXhH9cCp2pzRopkoFdfL.html; Bob Brecher, “Neoliberalism and
its Threat to Moral Agency” in Virtue and Economy. ed. Andrius
Bielskis and Kelvin Knight, 2015)
Neoliberalism has led to the greater
legitimization of activities that would otherwise be illegal to the degree that
the lines between the legitimate economy and organized criminal activity are
blurred reflecting the flexible lines between legally-financed
millionaire-backed elected officials and those with links to organized crime or
to illegal campaign contributions always carrying an illegal quid-pro-quo
legalized through public policy. Beyond the usual tax-haven suspects Panama,
Cyprus, Bermuda, Malta, Luxemburg, among others including states such as Nevada
and Wyoming, leaders from former Prime Minister Silvio Berlusconi to President
Donald Trump with reputed ties to organized criminal networks have benefited
from the neoliberal regime that they served. https://www.researchgate.net/publication/254953831_Economic_Crime_and_Neoliberal_Modes_of_Government_The_Example_of_the_Mediterranean)
Self-righteous pluralist neoliberals castigate
rightwing billionaires for funding rightwing politicians. However, there is
silence when it comes to the millions amassed by pluralist neoliberals as the
infamous “Panama Papers” revealed in 2016. Despite the institutionalized
kleptocracy, the media has indoctrinated the public to accept as ‘normal’ the
converging interests of the capitalist class and ruling political class just as
it has indoctrinated the public to accept social exclusion, social inequality,
and poverty as natural and democratic; all part of the social contract. (http://revistes.uab.cat/tdevorado/article/view/v2-n1-armao; Jose Manuel Sanchez Bermudez, The
Neoliberal Pattern of Domination: Capital’s Reign in Decline, 2012; https://www.globalresearch.ca/neoliberalisms-world-of-corruption-money-laundering-corporate-lobbying-drug-money/5519907
The Future of Neoliberalism
After the great recession of 2008, the
future of neoliberalism became the subject of debate among politicians,
journalists and academics. One school of thought was that the great recession
had exposed the flaws in neoliberalism thus marking the beginning of its demise.
The years since 2008 proved that in a twist of irony, the quasi-statist policies
of China with its phenomenal growth have actually been responsible for
sustaining neoliberalism globally and not just because China has been financing
US public debt by buying treasuries while the US buys products made in China.
This view holds that neoliberalism will continue to thrive so as long as China
continues its global ascendancy, thus the warm reception to Beijing as the new
globalist hegemonic power after Trump’s noise about pursuing economic nationalism
within the neoliberal model. (Barry Eichengreen, Hall of Mirrors: The Great
Depression, the Great Recession and the Uses and Misuses of History,
2016; http://www.e-ir.info/2011/08/23/has-the-global-financial-crisis-challenged-us-power-in-international-finance/)
China is not pursuing the kind of
neoliberal model that exists in the US or the EU, but its economy is well
integrated with the global neoliberal system and operates within those
perimeters despite quasi-statist policies also found in other countries to a
lesser degree. Adjusted for purchasing power parity (PPP), China’s current share
of world GDP stands at 16% and at annual growth above 6% it is expected to
reach 20%, by 2020. This in comparison with only 1.9% in 1979 and it explains
why its currency is now among the IMF-recognized reserved currencies. With
about half-a-million foreign companies in China and an average of 12,000 new
companies entering every day, capitalists from all over the world are betting
heavily on China’s future as the world’s preeminent capitalist core country in
the 21st century. China will play a determining role in the course
of global neoliberalism, and it is politically willing to accept the US as the
military hegemon while Beijing strives for economic preeminence. Interested in
extracting greater profits from China while tempering its race to number one,
Western businesses and governments have been pressuring Beijing to become more
immersed in neoliberal policies and eliminate all elements of statism. http://www.chinadaily.com.cn/business/2012-09/22/content_15775312.htm; https://en.portal.santandertrade.com/establish-overseas/china/foreign-investment
Although the US that has 450,000 troops
in 800 foreign military bases in more than 150 countries and uses its military
muscle along with ‘soft-power’ policies including sanctions as leverage for
economic power, many governments and multinational corporations consider
Beijing not Washington as a source of global stability and growth. With China
breathing new life into neoliberalism on the promise of geographic and social
convergence, it is fantasy to speculate that neoliberalism is in decline when
in fact it is becoming more forcefully ubiquitous. However, China like the West
that had promised geographic and social convergence
in the last four decades of neoliberalism will not be any more successful in
delivering on such promises. The result of such policies will continue to be
greater polarization and social exclusion and greater uneven development, with China
and multinationals investing in its enterprises becoming richer while the US will
continue to use militarism as leverage to retain global economic hegemony
rapidly eroding from its grip. (http://www.businessinsider.com/us-military-deployments-may-2017-5; http://www.zapruderworld.org/welfare-state-decline-and-rise-neoliberalism-1980s-some-approaches-between-latin-americas-core-and; Dic Lo, Alternatives to
Neoliberal Globalization, 2012)
Between China and the US, the world
can expect neoliberal globalization to continue under
the pluralist and populist rightwing models in different countries with the two
converging and reflecting the totalitarian essence of the system at its core. Characterized
by rapid development and sluggish growth in Japan and Western core countries, neoliberal
globalization has entailed lack of income convergence between the developed and
developing world where uneven export-oriented growth based on the primary
sector keeps developing nations perpetually dependent and poor. Interestingly,
the trend of falling incomes characteristic of the developing nations from 1980
to 2000 was just as true in Western countries. It was during these two decades
of ascendant neoliberalism that rightwing populist movements began to challenge
the pluralist neoliberal political camp and offering nationally-based
neoliberal solutions, further adding to the system’s existing contradictions. (Dic
Lo, Alternatives to Neoliberal Globalization, 2012)
The debate whether the rise of
populism or perhaps the faint voices of anti-capitalism will finally bring
about the end of neoliberalism often centers on the digital-biotech revolution often
blamed for exacerbating rather than solving social problems owing to uneven
benefits accruing across social classes. It is somewhat surprising that IMF economists
have questioned the wisdom of pursuing unfettered neoliberalism where there is
a trade-off between economic growth and social exclusion owing to growing income
inequality. Naturally, the IMF refrains from self-criticism and it would never
suggest that neoliberal globalization that the Fund has been promoting is
responsible for the rise of rightwing populism around the world.
Within the neoliberal camp,
pluralist-diversity advocates are satisfied they have done their part in the
‘fight for democracy’ when in fact their stealthy brand of the neoliberal
social contract is in some respects more dangerous than the populist camp which
is unapologetically candid about its pro-big business, pro-monopoly,
pro-deregulation anti-social welfare platform. Shortly after Trump won the presidential
election with the help of rightwing billionaires and disillusioned workers who
actually believed that he represented them rather than the billionaires, an
article appearing in the Christian Science Monitor is typical
of how pluralist neoliberals view the global tide of rightwing populism.
“Worldwide,
it has been a rough years for democracy. The UK, the United States and Colombia
made critical decisions about their nations' future, and – at least from the
perspective of liberal values and social justice – they decided poorly. Beyond
the clear persistence of racism, sexism and xenophobia in people's
decision-making, scholars and pundits have argued that to understand the
results of recent popular votes, we must reflect on neoliberalism.
International capitalism, which has dominated the globe for the past three
decades, has its winners and its losers. And, for many thinkers, the losers
have spoken. My fieldwork in South America has taught me that there are
alternative and effective ways to push back against neoliberalism. These
include resistance movements based on pluralism and alternative forms of social
organisation, production and consumption.” https://www.csmonitor.com/Technology/Breakthroughs-Voices/2016/1206/Opposing-neoliberalism-without-right-wing-populism-A-Latin-American-guide
Without analyzing the deeper causes of the global tide of rightwing
populism promoting neoliberalism under an authoritarian political platform,
pluralist-diversity neoliberals continue to promote socioeconomic policies that
lead to social exclusion, inequality, and uneven development as long as they
satisfy the cultural-lifestyle and corporate-based sustainable-development aspects
of the social contract. To lend legitimacy and public acceptance among those
expecting a commitment to pluralism, the neoliberal pluralists embrace the
superficialities and distraction of diversity and political correctness.
Ironically, the political correctness trend started during the Reagan
administration’s second term and served as a substitute for social justice that
the government and the private sector were rapidly eroding along with the
social welfare state and trade union rights. As long as there is ‘politically
correctness’, in public at least so that people feel they are part of a
‘civilized’ society, then public policy can continue on the barbaric path of
social exclusion, police-state methods, and greater economic inequality.
The future of neoliberalism includes the inevitability
that social exclusion will lead to social uprisings especially as even some
billionaires readily acknowledge the social contract favors them to the
detriment of society. As the voices against systemic exploitation become
louder, the likelihood will increase for authoritarian-police state policies if
not regimes reflecting the neoliberal social contract’s ubiquitous stranglehold
on society. Although resistance to neoliberalism will continue to grow, the
prospects for a social revolution in this century overturning the neoliberal
order in advanced capitalist countries is highly unlikely. Twentieth century
revolutions succeeded where the state structure was weak and people recognized
that the hierarchical social order was the root cause of the chasm between the
country’s vast social exclusion coupled with stagnation vs. its potential for a
more inclusive society where greater social equality and social justice would
be an integral part of the social contract. (Donna L. Chollett, Neoliberalism, Social Exclusion, and Social
Movements, 2013)
Despite everything pointing to the
dynamics of a continued neoliberal social contract, diehard pluralists like
British academic Martin Jacques and American economist Joseph Stiglitz insist
there is hope for reformist change. In The Politics of Thatcherism (1983)
Jacques applauded neoliberalism, but during the US presidential election in
2016 he had changed his mind, predicting neoliberalism’s demise. He felt
encouraged that other pluralist neoliberals like Paul Krugman and Joseph
Stiglitz were voicing their concerns signaling an interest in the debate about
social inequality. In an article entitled “The
death of neoliberalism and the crisis in western politics”, he wrote: “A sure sign of the declining influence of
neoliberalism is the rising chorus of intellectual voices raised against it.
From the mid-70s through the 80s, the economic debate was increasingly
dominated by monetarists and free marketeers.” https://www.theguardian.com/commentisfree/2016/aug/21/death-of-neoliberalism-crisis-in-western-politics
Along with Krugman, Stiglitz and others
in the pluralist camp favoring a policy mix that includes Keynesianism, Martin Jacques,
Thomas Picketty and others like them around the world do enjoy some small
influence with the pluralist-diversity camp. However, the demise of
neoliberalism will not result from intellectual critiques regardless of the
merits. On the contrary, the neoliberal social contract is solidifying not
evolving toward dissolution. This is largely because the dynamics of the social
order continue to favor it and the opposition is split between ultra-right
nationalists, pluralists of varying sorts resting on hope of restoring
Keynesian rationalism in the capitalist system, and the very weak and divided
leftists in just about every country and especially the core ones. https://theconversation.com/if-we-are-reaching-neoliberal-capitalisms-end-days-what-comes-next-72366
Neoliberalism’s
inherent contradictions will result in its demise and the transition into a new
phase of capitalism. Among the most obvious and glaring contradictions is that
the ideology promotes freedom and emancipation when in practice it is a
totalitarian system aimed to mold society and the individual into conformity of
its dogmatic market fundamentalism. Another contradiction is the emphasis of a
borderless global market, while capitalists operate within national borders and
are impacted by national policies that often collide at the international level
as the competition intensifies for market share just as was the case in the
four decades before the outbreak of WWI. Adding to the list of contradictions
that finds expression the debate between neoliberal rightwingers and pluralists
is the issue of “value-free” market fundamentalism while at the same time
neoliberals conduct policy that has very strong moral consequences in peoples’
lives precisely because of extremely uneven income distribution.
The enigma
in neoliberalism’s future is the role of grassroots movements that are in a
position to impact change but have failed thus far to make much impact. Most
people embrace the neoliberal political parties serving the same capitalist
class, operating under the illusion of a messiah politician delivering the
promise of salvation either from the pluralist or authoritarian wing of
neoliberalism. The turning point for systemic change emanates from within the
system that fails to serve the vast majority of the people as it is riddled
with contradictions that become more evident and the elites become increasingly
contentious about how to divide the economic pie and how to mobilize popular
support behind mainstream political parties so they can maintain the social
order under an unsustainable political economy. At that juncture, the neoliberal
social contract suffers an irrevocable crisis of public confidence on a mass
scale. Regardless under which political regime neoliberalism operates, people
will eventually reject hegemonic cultural indoctrination. A critical mass in society
has not reached this juncture. Nevertheless, social discontinuity is an
evolutionary process and the contradictions in neoliberalism will continue to
cause political disruption, economic disequilibrium and social upheaval.
