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Neoclassical Pseudo Theories and Crooked and Bought Economists as Fifth Column of Financial Oligarchy

There is no economics, only political economy, stupid

News Casino Capitalism Recommended Links Neoliberalism as Trotskyism for the rich Number racket Efficient Market Hypothesis Economism and abuse of economic theory in American politics
Supply Side or Trickle down economics Invisible Hand Hypothesys Twelve apostles of deregulation Monetarism fiasco Financial Sector Induced Systemic Instability of Economy Samuelson's bastard Keynesianism Greenspan as the Chairman of Financial Politburo
Libertarian Philosophy Elite [Dominance] Theory And the Revolt of the Elite The Iron Law of Oligarchy Audacious Oligarchy and "Democracy for Winners" Ayn Rand and her Objectivism Cult Neoliberal Brainwashing -- Journalism in the Service of the Powerful Few The Deep State
Free Market Fundamentalism Friedman --founder of Chicago school of deification of market Lawrence Summers Corruption of Regulators Glass-Steagall repeal Rational expectations scam Free Markets Newspeak
In Goldman Sachs we trust: classic example of regulatory capture by financial system hackers Mathiness GDP as a false measure of a country economic output Introduction to Lysenkoism Republican Economic Policy Think Tanks Enablers  Small government smoke screen
Hyman Minsky John Kenneth Galbraith  Bookshelf History of Casino Capitalism Casino Capitalism Dictionary :-) Humor Etc
Is it really necessary for every economist to be brain-dead apologist for the rich and powerful and predatory, in every damn breath?

Bruce Wilder in comments to Clash of Autonomy and Interdependence

Smith briskly takes a sledgehammer to any number of plaster saints cluttering up the edifice of modern economics:

"assumptions that are patently ridiculous: that individuals are rational and utility-maximizing (which has become such a slippery notion as to be meaningless), that buyers and sellers have perfect information, that there are no transaction costs, that capital flows freely"

And then...papers with cooked figures, economists oblivious to speculative factors driving oil prices, travesty versions of Keynes's ideas that airbrush out its most characteristic features in the name of mathematical tractability.

And then...any number of grand-sounding theoretical constructs: the Arrow-Debreu theorem, the Dynamic Stochastic General Equilibrium model, the Black-Scholes option model, Value at Risk, CAPM, the Gaussian copula, that only work under blatantly unrealistic assumptions that go by high falutin' names - equilibrium, ergodicity, and so on.

The outcome of this pseudo-scientific botching is an imposing corpus of pretentious quackery that somehow elevates unregulated "free markets" into the sole mechanism for distribution of the spoils of economic activity. We are supposed to believe that by some alchemical process, maximum indulgence of human greed results in maximum prosperity for all. That's unfair to alchemy: compared with the threadbare scientific underpinnings of this economic dogma, alchemy is a model of rigor.

How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism

How many others are being paid for punditry? Or has the culture of corruption spread so far that the question is, Who isn't?

PAUL KRUGMAN, NYT, December 19, 2005

"MIT and Wharton and University of Chicago created the financial engineering instruments which, like Samson and Delilah, blinded every CEO. They didn't realize the kind of leverage they were doing and they didn't understand when they were really creating a real profit or a fictitious one."

Paul Samuelson


Introduction

When you see this "neoclassical" gallery of expensive intellectual prostitutes (sorry, respectable priests of a dominant religion) that pretend to be professors of economics in various prominent universities, it is difficult not to say "It's political economy stupid". Those lackeys of ruling elite are just handing microphone bought by financial oligarchy.  Here is am Amazon.com review of  ECONned How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism eBook Yves Smith that  states this position well:

kievite:
Neoclassical economics as a universal door opener for financial oligarchy

There are many good reviews of the book published already and I don't want to repeat them. But I think there is one aspect of the book that was not well covered in the published reviews and which I think is tremendously important and makes the book a class of its own: the use of neoclassical economics as a universal door opener for financial oligarchy. I hope that the term "econned" will became a new word in English language.

Neoclassical economics has become the modern religion with its own priests, sacred texts and a scheme of salvation. It was a successful attempt to legitimize the unlimited rule of financial oligarchy by using quasi-mathematical, oversimplified and detached for reality models. The net result is a new brand of theology, which proved to be pretty powerful in influencing people and capturing governments("cognitive regulatory capture"). Like Marxism, neoclassical economics is a triumph of ideology over science. It was much more profitable though: those who were the most successful in driving this Trojan horse into the gates were remunerated on the level of Wall Street traders.

Economics is essentially a political science. And politics is about perception. Neo-classical economics is all about manipulating the perception in such a way as to untie hands of banking elite to plunder the country (and get some cramps from the table for themselves). Yves contributed to our understanding how "These F#@king Guys" as Jon Steward defined them, economics professors from Chicago, Harvard, Columbia, Princeton and some other places warmed by flow of money from banks for specific services provided managed to serve as a fifth column helping Wall Street to plunder the country. The rhetorical question that a special counsel to the U.S. Army, Joseph Welch, asked Senator McCarthy: "Have you no sense of decency?" applies.

The main effect of neoclassical economics is elevating unregulated ( "free" in neoclassic economics speak) markets into the key mechanism for distribution of the results of economic activity with banks as all-powerful middlemen and sedating any opposition with pseudo-mathematical mumbo-jumbo. Complexity was used as a powerful smoke screen to conceal greed and incompetence. As a result financial giants were able to loot almost all sectors of economics with impunity and without any remorse, not unlike the brutal conquerors in Middle Ages.

The key to the success of this nationwide looting is that people should be brainwashed/indoctrinated to believe that by some alchemical process, maximum level of greed results in maximum prosperity for all. Collapse of the USSR helped in this respect driving the message home: look how the alternative ended, when in reality the USSR was a neo-feudal society. But the exquisite irony here is that Bolsheviks-style ideological brainwashing was applied very successfully to the large part of the US population (especially student population) using neo-classical economics instead of Marxism (which by-and-large was also a pseudo-religious economic theory with slightly different priests and the plan of salvation ;-). The application of badly constructed mathematical models proved to be a powerful tool for distorting reality in a certain, desirable for financial elite direction. One of the many definitions of Ponzi Scheme is "transfer liabilities to unwilling others." The use of detached from reality mathematical models fits this definition pretty well.

The key idea here is that neoclassical economists are not and never have been scientists: much like Marxist economists they always were just high priests of a dangerous cult -- neoliberalism -- and they are more then eager to stretch the truth for the benefit of the sect (and indirectly to their own benefit). All-in-all this is not unlike Lysenkoism: state support was and still is here, it is just working more subtly via ostracism, without open repressions. Look at Shiller story on p.9.

I think that one of lasting insights provided by Econned is the demonstration how the US society was taken hostage by the ideological views of the neoclassical economic school that has dominated the field at least for 30 or may be even 50 years. And that this ideological coup d'état was initiated and financed by banking establishment who was a puppeteer behind the curtain. This is not unlike the capture of Russia by Bolsheviks supported by German intelligence services (and Bolshevics rule lasted slightly longer -- 65 years). Bolsheviks were just adherents of similar wrapped in the mantle of economic theory religious cult, abeit more dangerous and destructive for the people of Russia then neoclassical economics is for the people of the USA. Quoting Marx we can say "History repeats itself, first as tragedy, second as farce".

That also means that there is no easy way out of the current situation. Ideologies are sticky and can lead to the collapse of society rather then peaceful evolution.

So it's no surprise that there is a strong evidence that neo-classical economics is not a science, it's a political ideology of financial oligarchy masquerading as science. Or a religious cult, if you wish.

So it's no surprise that there is a strong evidence that neo-classical economics is not a science, it's a political ideology of financial oligarchy masquerading as science. Or a religious cult, if you wish.

The cult which served as a Trojan horse for bankers to grab power and wealth by robbing fellow Americans. In a way this is a classic story of a parasite killing the host. The powers that be in academia put their imprimatur on economic ‘theory,’ select and indoctrinate its high priests to teach it, and with a host of media players grinding out arguments pro and con this and that, provide legitimacy sufficient for cover of bankers objectives. Which control the disposition and annuity streams of pension fund assets and related financial services. In his new documentary Inside Job, filmmaker Charles Ferguson provides strong evidence of a systematic mass corruption of economic profession (Yahoo! Finance):

Ferguson points to 20 years of deregulation, rampant greed (a la Gordon Gekko) and cronyism. This cronyism is in large part due to a revolving door between not only Wall Street and Washington, but also the incestuous relationship between Wall Street, Washington and academia.

The conflicts of interest that arise when academics take on roles outside of education are largely unspoken, but a very big problem. “The academic economics discipline has been very heavily penetrated by the financial services industry,” Ferguson tells Aaron in the accompanying clip. “Many prominent academics now actually make the majority of their money from the financial services industry, not from teaching or research. [This fact] has definitely compromised the research work and the policy advice that we get from academia.”

... ... ...

Feguson is astonished by the lack of regulation demanding financial disclosure of all academics and is now pushing for it. “At a minimum, federal law should require public disclosure of all outside income that is in any way related to professors’ publishing and policy advocacy,” he writes. “It may be desirable to go even further, and to limit the total size of outside income that potentially generates conflicts of interest.”

The dismantling of economic schools that favor financial oligarchy interests over real research (and prosecuting academic criminals -- many prominent professors in Chicago, Harvard, Columbia and other prominent members of neo-classical economic church) require a new funding model. As neoliberalism itself, the neoclassical economy is very sticky. Chances for success of any reform in the current environment are slim to non existent.

Here is one apt quote from Zero Hedge discussion of Gonzalo Lira article On The Identity Of The False Religion Behind The Mask Of Economic Science zero hedge

"They analyze data for Christ sakes"

Just like Mishkin analyzed Iceland for $120k? a huge proportion in US [are] on Fed payroll, or beneficiaries of corporate thinktank cash; they are coverup lipstick and makeup; hacks for hire.

Like truth-trashing mortgage pushers, credit raters, CDO CDS market manipulators and bribe-fueled fraud enablers of all stripes -- they do it for the dough -- and because everybody else is doing it.

It's now a common understanding that "These F#@king Guys" as Jon Steward defined them, professors  of neoclassical economics from Chicago, Harvard and some other places are warmed by flow of money from financial services industries for specific services provided managed to serve as a fifth column helping financial oligarchy to destroy the country. This role of neo-classical economists as the fifth column of financial oligarchy is an interesting research topic. Just don't expect any grants for it ;-).

As Reinhold Niebuhr aptly noted in his classic Moral Man and Immoral Society
Since inequalities of privilege are greater than could possibly be defended rationally, the intelligence of privileged groups is usually applied to the task of inventing specious proofs for the theory that universal values spring from, and that general interests are served by, the special privileges which they hold.

I would like to stress it again: they are not and never have been scientists: they are just high priests of dangerous cult -- neoliberalism -- and they are more then eager to stretch the truth for the sect (and that means their own) benefits. Fifth column of financial oligarchy. All-in-all this is not unlike Lysenkoism: at some point state support became obvious as financial oligarchy gained significant share of government power (as Glass-Steagall repeal signified). It is just more subtle working via ostracism and flow of funding, without open repressions. See also Politicization of science and The Republican War on Science

Like Russia with Bolsheviks, the US society was taken hostage by the ideological views of the Chicago economic school that has dominated the field for approximately 50 years ( as minimum over 30 years). Actually the situation not unlike the situation with Lysenkoism is the USSR. It's pretty notable that the USA suffered 30 years of this farce, actually approximately the same amount of time the USSR scientific community suffered from Lysenkoism (1934-1965)

Rules of disclosure of sources of financing for economic research are non-existent


"Over the past 30 years, the economics profession—in economics departments, and in business, public policy, and law schools—has become so compromised by conflicts of interest that it now functions almost as a support group for financial services and other industries whose profits depend heavily on government policy.

The route to the 2008 financial crisis, and the economic problems that still plague us, runs straight through the economics discipline. And it's due not just to ideology; it's also about straightforward, old-fashioned money."

Peter Dormat noticed amazing similarity between medical researchers taking money from drug companies and economists. In case of medical researchers widespread corruption can at least be partially kept in check by rules of disclosure. Universities are being called out for their failure to disclose to public agencies the other, private grants researchers are pulling in. This is not perfect policing as the universities themselves get a cut of the proceeds, so that the conflict of interest exists but at least this is theirs too.

But there is no corresponding policy for economics. So for them there are not even rules to be broken. And this is not a bug, this is  feature.  In a sense corruption is officially institualized and expected in economics. Being a paid shill is the typical career of many professional economists. Some foundations require an acknowledgment in the published research they support, but that's all about “thank you”, not disclaimer about the level of influence of those who pay for the music exert on the selection of the tune. Any disclosure of other, privately-interested funding sources by economists is strictly voluntary, and in practice seldom occurs. Trade researchers can be funded by foreign governments or business associations and so on and so forth.

In this atmosphere pseudo-theories have currency and are attractive to economists who want to enrich themselves. That situation is rarely reflected in mainstream press. For example, there some superficial critiques of neo-classical economics as a new form of Lysenkoism (it enjoyed the support of the state) but MSM usually frame the meltdown of neo-classical economic theory something like "To all you corrupt jerks out there: shake off the old camouflage as it became too visible and find a new way misleading the masses...". At the same time it's a real shocker, what a bunch of toxic theories and ideologies starting from Reagan have done to the US economy.

That suggests that neo-economics such as Milton Friedman (and lower level patsies like Eugene Fama ) were just paid propagandists of a superficial, uninformed, and simplistic view of the world that was convenient to the ruling elite. While this is somewhat simplistic explanation, it's by-and-large true and that was one of the factors led the USA very close to the cliff... Most of their theories is not only just nonsense for any trained Ph.D level mathematician or computer scientist, they look like nonsense to any person with a college degree, who looks at them with a fresh, unprejudiced mind. There are several economic myths, popularized by well paid propagandists over the last thirty years, that are falling hard in the recent series of financial crises: the efficient market hypothesis, the inherent benefits of globalization from the natural equilibrium of national competitive advantages, and the infallibility of unfettered greed as a ideal method of managing and organizing human social behavior and maximizing national production.

I would suggest that and economic theory has a strong political-economic dimension. The cult of markets, ideological subservience and manipulation, etc. certainly are part of neo-classical economics that was influenced by underling political agenda this pseudo-theory promotes. As pdavidsonutk wrote: July 16, 2009 16:14

Keynes noted that "classical theorists resemble Euclidean geometers in a non Euclidean world who, discovering that in experience straight lines apparently parallel often meet, rebuke the lines for not keeping straight --as the only remedy for the unfortunate collisions. Yet in truth there is no remedy except to throw over the axiom of parallels to work out a non-Euclidean geometry. SOMETHING SIMILAR IS REQUIRED IN ECONOMICS TODAY. " [Emphasis added]

As I pointed out in my 2007 book JOHN MAYNARD KEYNES (Mentioned in this ECONOMIST article as a biography "of the master") Keynes threw over three classical axioms: (1) the neutral money axiom (2) the gross substitution axiom, and (3) the ergodic axiom.

The latter is most important for understanding why modern macroeconomics is dwelling in an Euclidean economics world rather than the non-Euclidean economics Keynes set forth.

The Ergodic axiom asserts that the future is merely the statistical shadow of the past so that if one develops a probability distribution using historical data, the same probability distribution will govern all future events till the end of time!! Thus in this Euclidean economics there is no uncertainty about the future only probabilistic risk that can reduce the future to actuarial certainty! In such a world rational people and firms know (with actuarial certainty) their intertemporal budget constrains and optimize -- so that there can never be an loan defaults, insolvencies, or bankruptcies.

Keynes argued that important economic decisions involved nonergodic processes, so that the future could NOT be forecasted on the basis of past statistical probability results -- and therefore certain human institutions had to be develop0ed as part of the law of contracts to permit people to make crucial decisions regarding a future that they "knew" they could not know and still sleep at night. When the future seems very uncertain, then rational people in a nonergodic world would decide not to make any decisions to commit their real resources -- but instead save via liquid assets so they could make decisions another day when the future seemed to them less uncertain.

All this is developed and the policy implications derived in my JOHN MAYNARD KEYNES (2007) book. Furthermore this nonergodic model is applied to the current financial and economic crisis and its solution in my 2009 book THE KEYNES SOLUTION: THE PATH TO GLOBAL PROSPERITY (Palgrave/Macmillan) where I tell the reader what Keynes would have written regarding today's domestic crisis in each nation and its international aspects.

Paul Davidson ghaliban wrote:

July 16, 2009 15:34

I think you could have written a shorter article to make your point about the dismal state of economics theory and practice, and saved space to think more imaginatively about ways to reform.

A bit like biology, economics must become econology - a study of real economic systems. It must give up its physics-envy. This on its own will lead its practitioners closer to the truth.

Like biological systems, economic systems are complex, and often exhibit emergent properties that cannot be predicted from the analysis of component parts. The best way to deal with this is (as in biology) to start with the basic organizational unit of analysis - the individual, and then study how the individual makes economic decisions in larger and larger groups (family/community), and how groups take economic decisions within larger and larger forms of economic organization. From this, econologists should determine whether there are any enduring patterns in how aggregate economic decisions are taken. If there are no easily discernable patterns, and aggregate decisions cannot be predicted from a knowledge of individual decision-making preferences, then the theory must rely (as it does in biology) on computer simulations with the economy replicated in as much detail as possible to limit the scope for modeling error. This path will illuminate the "physiology" of different economies.

A second area of development must look into "anatomy" - the connections between actors within the financial system, the connections between economic actors within the real economy, and the connections between the real and financial economies. What are the precise links demand and supply links between these groups, and how does money really flow through the economic system? A finer knowledge of economic anatomy will make it easier to produce better computer simulations of the economy, which will make it a bit easier to study economic physiology.

"Markets uber alles" or more correctly "Financial oligarchy uber alles"

In her interview What Exactly Is Neoliberalism  Wendy Brown advanced some Professor Wolin ideas to a new level and provide explanation why "neoclassical crooks" like Professor  Frederic Mishkin (of Financial Stability in Iceland fame) still rule the economics departments of the USA. They are instrumental in giving legitimacy to the neoliberal rule favoured by the financial oligarchy:

"... I treat neoliberalism as a governing rationality through which everything is "economized" and in a very specific way: human beings become market actors and nothing but, every field of activity is seen as a market, and every entity (whether public or private, whether person, business, or state) is governed as a firm. Importantly, this is not simply a matter of extending commodification and monetization everywhere-that's the old Marxist depiction of capital's transformation of everyday life. Neoliberalism construes even non-wealth generating spheres-such as learning, dating, or exercising-in market terms, submits them to market metrics, and governs them with market techniques and practices. Above all, it casts people as human capital who must constantly tend to their own present and future value. ..."

"... The most common criticisms of neoliberalism, regarded solely as economic policy rather than as the broader phenomenon of a governing rationality, are that it generates and legitimates extreme inequalities of wealth and life conditions; that it leads to increasingly precarious and disposable populations; that it produces an unprecedented intimacy between capital (especially finance capital) and states, and thus permits domination of political life by capital; that it generates crass and even unethical commercialization of things rightly protected from markets, for example, babies, human organs, or endangered species or wilderness; that it privatizes public goods and thus eliminates shared and egalitarian access to them; and that it subjects states, societies, and individuals to the volatility and havoc of unregulated financial markets. ..."

"... with the neoliberal revolution that homo politicus is finally vanquished as a fundamental feature of being human and of democracy. Democracy requires that citizens be modestly oriented toward self-rule, not simply value enhancement, and that we understand our freedom as resting in such self-rule, not simply in market conduct. When this dimension of being human is extinguished, it takes with it the necessary energies, practices, and culture of democracy, as well as its very intelligibility. ..."

"... For most Marxists, neoliberalism emerges in the 1970s in response to capitalism's falling rate of profit; the shift of global economic gravity to OPEC, Asia, and other sites outside the West; and the dilution of class power generated by unions, redistributive welfare states, large and lazy corporations, and the expectations generated by educated democracies. From this perspective, neoliberalism is simply capitalism on steroids: a state and IMF-backed consolidation of class power aimed at releasing capital from regulatory and national constraints, and defanging all forms of popular solidarities, especially labor. ..."

"... The grains of truth in this analysis don't get at the fundamental transformation of social, cultural, and individual life brought about by neoliberal reason. They don't get at the ways that public institutions and services have not merely been outsourced but thoroughly recast as private goods for individual investment or consumption. And they don't get at the wholesale remaking of workplaces, schools, social life, and individuals. For that story, one has to track the dissemination of neoliberal economization through neoliberalism as a governing form of reason, not just a power grab by capital. There are many vehicles of this dissemination -- law, culture, and above all, the novel political-administrative form we have come to call governance. It is through governance practices that business models and metrics come to irrigate every crevice of society, circulating from investment banks to schools, from corporations to universities, from public agencies to the individual. It is through the replacement of democratic terms of law, participation, and justice with idioms of benchmarks, objectives, and buy-ins that governance dismantles democratic life while appearing only to instill it with "best practices." ..."

"... Progressives generally disparage Citizens United for having flooded the American electoral process with corporate money on the basis of tortured First Amendment reasoning that treats corporations as persons. However, a careful reading of the majority decision also reveals precisely the thoroughgoing economization of the terms and practices of democracy we have been talking about. In the majority opinion, electoral campaigns are cast as "political marketplaces," just as ideas are cast as freely circulating in a market where the only potential interference arises from restrictions on producers and consumers of ideas-who may speak and who may listen or judge. Thus, Justice Kennedy's insistence on the fundamental neoliberal principle that these marketplaces should be unregulated paves the way for overturning a century of campaign finance law aimed at modestly restricting the power of money in politics. Moreover, in the decision, political speech itself is rendered as a kind of capital right, functioning largely to advance the position of its bearer, whether that bearer is human capital, corporate capital, or finance capital. This understanding of political speech replaces the idea of democratic political speech as a vital (if potentially monopolizable and corruptible) medium for public deliberation and persuasion. ..."

"... My point was that democracy is really reduced to a whisper in the Euro-Atlantic nations today. Even Alan Greenspan says that elections don't much matter much because, "thanks to globalization . . . the world is governed by market forces," not elected representatives. ..."

 


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Old News ;-)

I find an attempt to elevate academic finance and economics to sciences by using the word "scientism" to be bizarre. Finance models like CAPM, Black-Scholes and VAR all rest on assumptions that are demonstrably false, such as rational investors and continuous markets.

May 11, 2012 at 1-40 pm

[Oct 11, 2017] The elite schools, and I have taught as a visiting professor at a few of them, such as Princeton and Columbia, replicate the structure and goals of corporations

Notable quotes:
"... The elite schools, and I have taught as a visiting professor at a few of them, such as Princeton and Columbia, replicate the structure and goals of corporations. If you want to even get through a doctoral committee, much less a tenure committee, you must play it really, really safe. You must not challenge the corporate-friendly stance that permeates the institution and is imposed through corporate donations and the dictates of wealthy alumni. Half of the members of most of these trustee boards should be in prison! ..."
"... Speculation in the 17th century in Britain was a crime. Speculators were hanged. And today they run the economy and the country. They have used the capturing of wealth to destroy the intellectual, cultural and artistic life in the country and snuff out our democracy. There is a word for these people: traitors. ..."
Oct 11, 2017 | www.unz.com

Originally from: The elites "have no credibility left" by Chris Hedges

...The elite schools, and I have taught as a visiting professor at a few of them, such as Princeton and Columbia, replicate the structure and goals of corporations. If you want to even get through a doctoral committee, much less a tenure committee, you must play it really, really safe. You must not challenge the corporate-friendly stance that permeates the institution and is imposed through corporate donations and the dictates of wealthy alumni. Half of the members of most of these trustee boards should be in prison!

Speculation in the 17th century in Britain was a crime. Speculators were hanged. And today they run the economy and the country. They have used the capturing of wealth to destroy the intellectual, cultural and artistic life in the country and snuff out our democracy. There is a word for these people: traitors.

[Oct 11, 2017] Russia witch hunt is a tactic used by the ruling elite, and in particular the Democratic Party, to avoid facing a very unpleasant reality: that their unpopularity is the outcome of their policies of deindustrialization and the assault against working class

Highly recommended!
Chris Hedges, who is doubtless a courageous journalist and an intelligent commentator, suggests that if we are to discuss the anti-Russia campaign realistically, as baseless in fact, and as contrived for an effect and to further/protect some particular interests, we can hardly avoid the question: Who or what interest is served by the anti-Russia campaign?
An interesting observation "The Democratic Party doesn't actually function as a political party. It's about perpetual mass mobilization and a hyperventilating public relations arm, all paid for by corporate donors. The base of the party has no real say in the leadership or the policies of the party, as Bernie Sanders and his followers found out."
The other relevant observation is that there is no American left. It was destroyed as a political movement. The USA is a right wing country.
Notable quotes:
"... This obsession with Russia is a tactic used by the ruling elite, and in particular the Democratic Party, to avoid facing a very unpleasant reality: that their unpopularity is the outcome of their policies of deindustrialization and the assault against working men and women and poor people of color. ..."
"... It is the result of the slashing of basic government services, including, of course, welfare, that Clinton gutted; deregulation, a decaying infrastructure, including public schools, and the de facto tax boycott by corporations. It is the result of the transformation of the country into an oligarchy. The nativist revolt on the right, and the aborted insurgency within the Democratic Party, makes sense when you see what they have done to the country. ..."
"... The Democratic Party, in particular, is driving this whole Russia witch-hunt. It cannot face its complicity in the destruction of our civil liberties -- and remember, Barack Obama's assault on civil liberties was worse than those carried out by George W. Bush -- and the destruction of our economy and our democratic institutions. ..."
"... Politicians like the Clintons, Pelosi and Schumer are creations of Wall Street. That is why they are so virulent about pushing back against the Sanders wing of the Democratic Party. ..."
"... The Democratic Party doesn't actually function as a political party. It's about perpetual mass mobilization and a hyperventilating public relations arm, all paid for by corporate donors. The base of the party has no real say in the leadership or the policies of the party, as Bernie Sanders and his followers found out. They are props in the sterile political theater. ..."
"... These party elites, consumed by greed, myopia and a deep cynicism, have a death grip on the political process. They're not going to let it go, even if it all implodes. ..."
"... The whole exercise was farcical. The White House would leak some bogus story to Judy Miller or Michael Gordon, and then go on the talk shows to say, 'as the Times reported .' It gave these lies the veneer of independence and reputable journalism. This was a massive institutional failing, and one the paper has never faced. ..."
"... The media's anti-Russia narrative has been embraced by large portions of what presents itself as the "left." ..."
"... Well, don't get me started on the American left. First of all, there is no American left -- not a left that has any kind of seriousness, that understands political or revolutionary theories, that's steeped in economic study, that understands how systems of power work, especially corporate and imperial power. The left is caught up in the same kind of cults of personality that plague the rest of society. It focuses on Trump, as if Trump is the central problem. Trump is a product, a symptom of a failed system and dysfunctional democracy, not the disease. ..."
"... For good measure, they purged the liberal class -- look at what they did to Henry Wallace -- so that Cold War "liberals" equated capitalism with democracy, and imperialism with freedom and liberty. I lived in Switzerland and France. There are still residues of a militant left in Europe, which gives Europeans something to build upon. But here we almost have to begin from scratch. ..."
"... The corporate elites we have to overthrow already hold power. And unless we build a broad, popular resistance movement, which takes a lot of patient organizing among working men and women, we are going to be steadily ground down. ..."
"... The corporate state has made it very hard to make a living if you hold fast to this radical critique. You will never get tenure. You probably won't get academic appointments. You won't win prizes. You won't get grants. ..."
"... The elite schools, and I have taught as a visiting professor at a few of them, such as Princeton and Columbia, replicate the structure and goals of corporations. If you want to even get through a doctoral committee, much less a tenure committee, you must play it really, really safe. You must not challenge the corporate-friendly stance that permeates the institution and is imposed through corporate donations and the dictates of wealthy alumni. Half of the members of most of these trustee boards should be in prison! ..."
"... Speculation in the 17th century in Britain was a crime. Speculators were hanged. And today they run the economy and the country. They have used the capturing of wealth to destroy the intellectual, cultural and artistic life in the country and snuff out our democracy. There is a word for these people: traitors. ..."
Oct 11, 2017 | www.unz.com

Originally from: The elites "have no credibility left" by Chris Hedges

But the whole idea that the Russians swung the election to Trump is absurd. It's really premised on the unproven claim that Russia gave the Podesta emails to WikiLeaks, and the release of these emails turned tens, or hundreds of thousands, of Clinton supporters towards Trump. This doesn't make any sense. Either that, or, according to the director of national intelligence, RT America, where I have a show, got everyone to vote for the Green Party.

This obsession with Russia is a tactic used by the ruling elite, and in particular the Democratic Party, to avoid facing a very unpleasant reality: that their unpopularity is the outcome of their policies of deindustrialization and the assault against working men and women and poor people of color. It is the result of disastrous trade agreements like NAFTA that abolished good-paying union jobs and shipped them to places like Mexico, where workers without benefits are paid $3.00 an hour. It is the result of the explosion of a system of mass incarceration, begun by Bill Clinton with the 1994 omnibus crime bill, and the tripling and quadrupling of prison sentences. It is the result of the slashing of basic government services, including, of course, welfare, that Clinton gutted; deregulation, a decaying infrastructure, including public schools, and the de facto tax boycott by corporations. It is the result of the transformation of the country into an oligarchy. The nativist revolt on the right, and the aborted insurgency within the Democratic Party, makes sense when you see what they have done to the country.

Police forces have been turned into quasi-military entities that terrorize marginal communities, where people have been stripped of all of their rights and can be shot with impunity; in fact over three are killed a day. The state shoots and locks up poor people of color as a form of social control. They are quite willing to employ the same form of social control on any other segment of the population that becomes restive.

The Democratic Party, in particular, is driving this whole Russia witch-hunt. It cannot face its complicity in the destruction of our civil liberties -- and remember, Barack Obama's assault on civil liberties was worse than those carried out by George W. Bush -- and the destruction of our economy and our democratic institutions.

Politicians like the Clintons, Pelosi and Schumer are creations of Wall Street. That is why they are so virulent about pushing back against the Sanders wing of the Democratic Party. Without Wall Street money, they would not hold political power. The Democratic Party doesn't actually function as a political party. It's about perpetual mass mobilization and a hyperventilating public relations arm, all paid for by corporate donors. The base of the party has no real say in the leadership or the policies of the party, as Bernie Sanders and his followers found out. They are props in the sterile political theater.

These party elites, consumed by greed, myopia and a deep cynicism, have a death grip on the political process. They're not going to let it go, even if it all implodes.

... ... ...

DN: Let's come back to this question of the Russian hacking news story. You raised the ability to generate a story, which has absolutely no factual foundation, nothing but assertions by various intelligence agencies, presented as an assessment that is beyond question. What is your evaluation of this?

CH: The commercial broadcast networks, and that includes CNN and MSNBC, are not in the business of journalism. They hardly do any. Their celebrity correspondents are courtiers to the elite. They speculate about and amplify court gossip, which is all the accusations about Russia, and they repeat what they are told to repeat. They sacrifice journalism and truth for ratings and profit. These cable news shows are one of many revenue streams in a corporate structure. They compete against other revenue streams. The head of CNN, Jeff Zucker, who helped create the fictional persona of Donald Trump on "Celebrity Apprentice," has turned politics on CNN into a 24-hour reality show. All nuance, ambiguity, meaning and depth, along with verifiable fact, are sacrificed for salacious entertainment. Lying, racism, bigotry and conspiracy theories are given platforms and considered newsworthy, often espoused by people whose sole quality is that they are unhinged. It is news as burlesque.

I was on the investigative team at the New York Times during the lead-up to the Iraq War. I was based in Paris and covered Al Qaeda in Europe and the Middle East. Lewis Scooter Libby, Dick Cheney, Richard Perle and maybe somebody in an intelligence agency, would confirm whatever story the administration was attempting to pitch. Journalistic rules at the Times say you can't go with a one-source story. But if you have three or four supposedly independent sources confirming the same narrative, then you can go with it, which is how they did it. The paper did not break any rules taught at Columbia journalism school, but everything they wrote was a lie.

The whole exercise was farcical. The White House would leak some bogus story to Judy Miller or Michael Gordon, and then go on the talk shows to say, 'as the Times reported .' It gave these lies the veneer of independence and reputable journalism. This was a massive institutional failing, and one the paper has never faced.

DN: The CIA pitches the story, and then the Times gets the verification from those who pitch it to them.

CH: It's not always pitched. And not much of this came from the CIA. The CIA wasn't buying the "weapons of mass destruction" hysteria.

DN: It goes the other way too?

CH: Sure. Because if you're trying to have access to a senior official, you'll constantly be putting in requests, and those officials will decide when they want to see you. And when they want to see you, it's usually because they have something to sell you.

DN: The media's anti-Russia narrative has been embraced by large portions of what presents itself as the "left."

CH: Well, don't get me started on the American left. First of all, there is no American left -- not a left that has any kind of seriousness, that understands political or revolutionary theories, that's steeped in economic study, that understands how systems of power work, especially corporate and imperial power. The left is caught up in the same kind of cults of personality that plague the rest of society. It focuses on Trump, as if Trump is the central problem. Trump is a product, a symptom of a failed system and dysfunctional democracy, not the disease.

If you attempt to debate most of those on the supposedly left, they reduce discussion to this cartoonish vision of politics.

The serious left in this country was decimated. It started with the suppression of radical movements under Woodrow Wilson, then the "Red Scares" in the 1920s, when they virtually destroyed our labor movement and our radical press, and then all of the purges in the 1950s. For good measure, they purged the liberal class -- look at what they did to Henry Wallace -- so that Cold War "liberals" equated capitalism with democracy, and imperialism with freedom and liberty. I lived in Switzerland and France. There are still residues of a militant left in Europe, which gives Europeans something to build upon. But here we almost have to begin from scratch.

I've battled continuously with Antifa and the Black Bloc. I think they're kind of poster children for what I would consider phenomenal political immaturity. Resistance is not a form of personal catharsis. We are not fighting the rise of fascism in the 1930s. The corporate elites we have to overthrow already hold power. And unless we build a broad, popular resistance movement, which takes a lot of patient organizing among working men and women, we are going to be steadily ground down.

So Trump's not the problem. But just that sentence alone is going to kill most discussions with people who consider themselves part of the left.

The corporate state has made it very hard to make a living if you hold fast to this radical critique. You will never get tenure. You probably won't get academic appointments. You won't win prizes. You won't get grants. The New York Times , if they review your book, will turn it over to a dutiful mandarin like George Packer to trash it -- as he did with my last book. The elite schools, and I have taught as a visiting professor at a few of them, such as Princeton and Columbia, replicate the structure and goals of corporations. If you want to even get through a doctoral committee, much less a tenure committee, you must play it really, really safe. You must not challenge the corporate-friendly stance that permeates the institution and is imposed through corporate donations and the dictates of wealthy alumni. Half of the members of most of these trustee boards should be in prison!

Speculation in the 17th century in Britain was a crime. Speculators were hanged. And today they run the economy and the country. They have used the capturing of wealth to destroy the intellectual, cultural and artistic life in the country and snuff out our democracy. There is a word for these people: traitors.

[Oct 10, 2017] The US Economy: Explaining Stagnation and Why It Will Persist by Thomas I. Palley

Highly recommended!
The paper is two years old. Looks how his prediction fared. Stagnation is still with us althouth low oil prices lifted all the boats. But this period is coming to the end.
Notable quotes:
"... The financial crisis that erupted in 2008 challenged the foundations of orthodox economic theory and policy. At its outset, orthodox economists were stunned into silence as evidenced by their inability to answer the Queen of England's simple question (November 5th, 2008) to the faculty of the London School of Economics as to why no one foresaw the crisis. ..."
"... Six years later, orthodoxy has fought back and largely succeeded in blocking change of thought and policy. The result has been economic stagnation ..."
"... Perspective # 3 is the progressive position which is rooted in Keynesian economics and can be labeled the "destruction of shared prosperity hypothesis" ..."
"... It is identified with the New Deal wing of the Democratic Party and the labor movement, but it has no standing within major economics departments owing to their suppression of alternatives to economic orthodoxy. ..."
"... However, financial excess is just an element of the crisis and the full explanation is far deeper than just financial market regulatory failure According to the Keynesian destruction of shared prosperity hypothesis, the deep cause is generalized economic policy failure rooted in the flawed neoliberal economic paradigm that was adopted in the late 1970s and early 1980s. ..."
"... globalization reconfigured global production by transferring manufacturing from the U.S. and Europe to emerging market economies. This new global division of labor was then supported by having U.S. consumers serve as the global economy's buyer of first and last resort, which explains the U.S. trade deficit and the global imbalances problem. ..."
"... This new global division of labor inevitably created large trade deficits that also contributed to weakening the aggregate demand (AD)generation process by causing a hemorrhage of spending on imports (Palley, 2015) ..."
"... Finance does this through three channels. First, financial markets have captured control of corporations via enforcement of the shareholder value maximization paradigm of corporate governance. Consequently, corporations now serve financial market interests along with the interests of top management. Second, financial markets in combination with corporations lobby politically for the neoliberal policy mix. ..."
"... Third, financial innovation has facilitated and promoted financial market control of corporations via hostile take-overs, leveraged buyouts and reverse capital distributions. Financial innovation has therefore been key for enforcing Wall Street's construction of the shareholder value maximization paradigm. ..."
"... The second vital role of finance is the support of AD. The neoliberal model gradually undermined the income and demand generation process, creating a growing structural demand gap. The role of finance was to fill that gap. Thus, within the U.S., deregulation, financial innovation, speculation, and mortgage lending fraud enabled finance to fill the demand gap by lending to consumers and by spurring asset price inflation ..."
"... this AD generation role of finance was an unintended consequence and not part of a grand plan. Neoliberal economists and policymakers did not realize they were creating a demand gap, but their laissez-faire economic ideology triggered financial market developments that coincidentally filled the demand gap. ..."
"... the financial process they unleashed was inevitably unstable and was always destined to hit the wall. There are limits to borrowing and limits to asset price inflation and all Ponzi schemes eventually fall apart. ..."
"... the long duration of financial excess made the collapse far deeper when it eventually happened. It has also made escaping the after-effects of the financial crisis far more difficult as the economy is now burdened by debts and destroyed credit worthiness. That has deepened the proclivity to economic stagnation. ..."
"... The neoliberal labor market flexibility agenda explicitly attacks unions and works to shift income to wealthier households. ..."
"... That model inevitably produces stagnation because it produces a structural demand shortage via (i) its impact on income distribution, and (ii) via its design of globalization which generates massive trade deficits, wage competition and off-shoring of jobs and investment. In terms of the three-way contest between the government failure hypothesis, the market failure hypothesis and the destruction of shared prosperity hypothesis, the economic policy debate during the Great Recession was cast as exclusively between government failure and market failure. ..."
"... This attitude to fiscal policy reflects the dominance within the Democratic Party of "Rubinomics", the Wall Street view associated with former Treasury Secretary Robert Rubin, that government spending and budget deficits raise real interest rates and thereby lower growth. According to that view, the US needs long-term fiscal austerity to offset Social Security and Medicare Side-by-side with the attempt to reflate the economy, the Obama administration also pushed for major overhaul and tightening of financial sector regulation via the Dodd- Frank Act (2010). ..."
"... The Obama administration's softcore neoliberalism would have likely generated stagnation by itself, but the prospect has been further strengthened by Republicans. ..."
"... The Obama administration was to provide fiscal stimulus to jump start the economy; the Fed would use QE to blow air back into the asset price bubble; the Dodd-Frank Act (2010) would stabilize financial markets; and globalization would be deepened by further NAFTA-styled international agreements. This is a near-identical model to that which failed so disastrously. Consequently, stagnation is the logical prognosis. ..."
"... Consequently, the economy is destined to repeat the patterns of the 1990s and 2000s. However, the US economy has also experienced almost twenty more years of neoliberalism which has left its economic body in worse health than the 1990s. That means the likelihood of delivering another bubble-based boom is low and stagnation tendencies will likely reassert themselves after a shorter and weaker period of expansion ..."
Apr 10, 2015 | www.thomaspalley.com

Abstract

This paper examines the major competing interpretations of the economic crisis in the US and explains the rebound of neoliberal orthodoxy. It shows how US policymakers acted to stabilize and save the economy, but failed to change the underlying neoliberal economic policy model. That failure explains the emergence of stagnation, which is likely to endure

Current economic conditions in the US smack of the mid-1990s. The 1990s expansion proved unsustainable and so will the current modest expansion. However, this time it is unlikely to be followed by financial crisis because of the balance sheet cleaning that took place during the last crisis

Revised 1: This paper has been prepared for inclusion in Gallas, Herr, Hoffer and Scherrer (eds.), Combatting Inequality: The Global North and South , Rouledge, forthcoming in 2015.

The crisis and the resilience of neoliberal economic orthodoxy

The financial crisis that erupted in 2008 challenged the foundations of orthodox economic theory and policy. At its outset, orthodox economists were stunned into silence as evidenced by their inability to answer the Queen of England's simple question (November 5th, 2008) to the faculty of the London School of Economics as to why no one foresaw the crisis.

Six years later, orthodoxy has fought back and largely succeeded in blocking change of thought and policy. The result has been economic stagnation

This paper examines the major competing interpretations of the economic crisis in the US and explains the rebound of neoliberal orthodoxy. It shows how US policymakers acted to stabilize and save the economy, but failed to change the underlying neoliberal economic policy model.

That failure explains the emergence of stagnation in the US economy and stagnation is likely to endure.

Current economic conditions in the US smack of the mid-1990s. The 1990s expansion proved unsustainable and so will the current modest expansion. However, this time it is unlikely to be followed by financial crisis because of the balance sheet cleaning that took place during the last crisis.

Competing explanations of the crisis

The Great Recession, which began in December 2007 and includes the financial crisis of 2008, is the deepest economic downturn in the US since the World War II. The depth of the downturn is captured in Table 1 which shows the decline in GDP and the peak unemployment rate. The recession has the longest duration and the decline in GDP is the largest. The peak unemployment rate was slightly below the peak rate of the recession of 1981-82. However, this ignores the fact that the labor force participation rate fell in the Great Recession (i.e. people left the labor force and were not counted as unemployed) whereas it increased in the recession of 1981-82 (i.e. people entered the labor force and were counted as unemployed).

Table 1. Alternative measures of the depth of US recessions.

... ... ...

Table 2 provides data on the percent change in private sector employment from business cycle peak to trough. The 7.6 percent loss of private sector jobs in the Great Recession dwarfs other recessions, providing another measure of its depth and confirming it extreme nature. 2 Over the course of the 1981-82 labor force participation rose from 63.8 percent to 64.2 percent, thereby likely increasing the unemployment rate. In contrast, over the course of the Great Recession the labor force participation rate fell from 66.0 percent to 65.7 percent, thereby likely decreasing the unemployment. The decrease in the labor force participation rate was even sharper for prime age (25 – 54 years old) workers, indicating that the decrease in the overall participation rate was not due to demographic factors such as an aging population. Instead, it was due to lack of job opportunities, which supports the claim that labor force exit lowered the unemployment rate. Table 2. U.S. private employment cycles, peak to trough. Source: Bureau of labor statistics and author's calculations.

... ... ...

Broadly speaking there exist three competing perspectives on the crisis (Palley, 2012).

For the period 1945 - 1975 the U.S. economy was characterized by a "virtuous circle" Keynesian growth model built on full employment and wage growth tied to productivity growth. This model is illustrated in Figure 1 and its logic was as follows. Productivity growth drove wage growth, which in turn fuelled demand growth and created full employment. That provided an incentive for investment, which drove further productivity growth and supported higher wages. This model held in the U.S. and, subject to local modifications, it also held throughout the global economy - in Western Europe, Canada, Japan, Mexico, Brazil and Argentina.

Figure 1. The 1945 – 75 virtuous circle Keynesian growth model. Wage growth Demand growth Full employment Productivity growth Investment

After 1980 the virtuous circle Keynesian growth model was replaced by a neoliberal growth model. The reasons for the change are a complex mix of economic, political and sociological reasons that are beyond the scope of the current paper. The key changes wrought by the new model were:

  1. Abandonment of the commitment to full employment and the adoption of commitment to very low inflation;
  2. Severing of the link between wages and productivity growth.

Together, these changes created a new economic dynamic. Before 1980, wages were the engine of U.S. demand growth. After 1980, debt and asset price inflation became the engine The new economic model was rooted in neoliberal economic thought. Its principal effects were to weaken the position of workers; strengthen the position of corporations; and unleash financial markets to serve the interests of financial and business elites.

As illustrated in figure 2, the new model can be described as a neoliberal policy box that fences workers in and pressures them from all sides. On the left hand side, the corporate model of globalization put workers in international competition via global production networks that are supported by free trade agreements and capital mobility.

On the right hand side, the "small" government agenda attacked the legitimacy of government and pushed persistently for deregulation regardless of dangers. From below, the labor market flexibility agenda attacked unions and labor market supports such as the minimum wage, unemployment benefits, employment protections, and employee rights. From above, policymakers abandoned the commitment of full employment, a development that was reflected in the rise of inflation targeting and the move toward independent central banks influenced by financial interests.

Figure 2. The neoliberal policy box. Globalization WORKERS Abandonment of full employment Small Government Labor Market Flexibility

Corporate globalization is an especially key feature. Not only did it exert downward inward pressures on economies via import competition and the threat of job off-shoring, it also provided the architecture binding economies together. Thus, globalization reconfigured global production by transferring manufacturing from the U.S. and Europe to emerging market economies. This new global division of labor was then supported by having U.S. consumers serve as the global economy's buyer of first and last resort, which explains the U.S. trade deficit and the global imbalances problem.

This new global division of labor inevitably created large trade deficits that also contributed to weakening the aggregate demand (AD)generation process by causing a hemorrhage of spending on imports (Palley, 2015)

An important feature of the Keynesian hypothesis is that the neoliberal policy box was implemented on a global basis, in both the North and the South. As in the U.S., there was also a structural break in policy regime in both Europe and Latin America. In Latin America , the International Monetary Fund and World Bank played an important role as they used the economic distress created by the 1980s debt crisis to push neoliberal policy

They did so by making financial assistance conditional on adopting such policies. This global diffusion multiplied the impact of the turn to neoliberal economic policy and it explains why the Washington Consensus enforced by the International Monetary Fund and World Bank has been so significant. It also explains why stagnation has taken on a global dimension.

III The role of finance in the neoliberal model

Owing to the extraordinarily deep and damaging nature of the financial crisis of 2008, financial market excess has been a dominant focus of explanations of the Great Recession. Within the neoliberal government failure hypothesis the excess is attributed to ill-advised government intervention and Federal Reserve interest rate policy. Within the neoliberal market failure hypothesis it is attributed to ill-advised deregulation and failure to modernize regulation.

According to the Keynesian destruction of shared prosperity hypothesis neither of those interpretations grasps the true significance of finance. The government failure hypothesis is empirically unsupportable (Palley, 2012a, chapter 6), while the market failure hypothesis has some truth but also misses the true role of finance That role is illustrated in Figure 3 which shows that finance performed two roles in the neoliberal model. The first was to structurally support the neoliberal policy box. The second was to support the AD generation process. These dual roles are central to the process of increasing financial domination of the economy which has been termed financialization (Epstein, 2004, p.3; Krippner, 2004, 2005; Palley, 2013). Figure 3. The role of finance in the neoliberal model. The role of finance: "financialization" Supporting the neoliberal policy box Aggregate demand generation Corporate behavior Economic policy Financial innovation The policy box shown in Figure 2 has four sides.

A true box has six sides and a four sided structure would be prone to structural weakness.

Metaphorically speaking, one role of finance is to provide support on two sides of the neoliberal policy box, as illustrated in Figure 4.

Finance does this through three channels. First, financial markets have captured control of corporations via enforcement of the shareholder value maximization paradigm of corporate governance. Consequently, corporations now serve financial market interests along with the interests of top management. Second, financial markets in combination with corporations lobby politically for the neoliberal policy mix.

The combination of changed corporate behavior and economic policy produces an economic matrix that puts wages under continuous pressure and raises income inequality.

Third, financial innovation has facilitated and promoted financial market control of corporations via hostile take-overs, leveraged buyouts and reverse capital distributions. Financial innovation has therefore been key for enforcing Wall Street's construction of the shareholder value maximization paradigm.

Figure 4. Lifting the lid on the neoliberal policy box. The neoliberal box Corporations Financial markets

The second vital role of finance is the support of AD. The neoliberal model gradually undermined the income and demand generation process, creating a growing structural demand gap. The role of finance was to fill that gap. Thus, within the U.S., deregulation, financial innovation, speculation, and mortgage lending fraud enabled finance to fill the demand gap by lending to consumers and by spurring asset price inflation

Financialization assisted with this process by changing credit market practices and introducing new credit instruments that made credit more easily and widely available to corporations and households. U.S. consumers in turn filled the global demand gap, along with help from U.S. and European corporations who were shifting manufacturing facilities and investment to the emerging market economies.

Three things should be emphasized.

  1. First, this AD generation role of finance was an unintended consequence and not part of a grand plan. Neoliberal economists and policymakers did not realize they were creating a demand gap, but their laissez-faire economic ideology triggered financial market developments that coincidentally filled the demand gap.
  2. Second, the financial process they unleashed was inevitably unstable and was always destined to hit the wall. There are limits to borrowing and limits to asset price inflation and all Ponzi schemes eventually fall apart. The problem is it is impossible to predict when they will fail. All that can be known with confidence is that it will eventually fail.
  3. Third, the process went on far longer than anyone expected, which explains why critics of neoliberalism sounded like Cassandras (Palley, 1998, Chapter 12). However, the long duration of financial excess made the collapse far deeper when it eventually happened. It has also made escaping the after-effects of the financial crisis far more difficult as the economy is now burdened by debts and destroyed credit worthiness. That has deepened the proclivity to economic stagnation.
IV Evidence

Evidence regarding the economic effects of the neoliberal model is plentiful and clear Figure 5 shows productivity and average hourly compensation of non-supervisory workers (that is non-managerial employees who are about 80 percent of the workforce). The link with productivity growth was severed almost 40 years ago and hourly compensation has been essentially stagnant since then.

Figure 5.

... ... ...

Table 3 shows data on the distribution of income growth by business cycle expansion across the wealthiest top 10 percent and bottom 90 percent of households. Over the past sixty years there has been a persistent decline in the share of income gains going to the bottom 90 percent of households ranked by wealth. However, in the period 1948 – 1979 the decline was gradual. After 1980 there is a massive structural break and the share of income gains going to the bottom 90 percent collapses. Before 1980, on average the bottom 90 percent received 66 percent of business cycle expansion income gains. After 1980, on average they receive just 8 percent.

Table 3. Distribution of income growth by business cycle expansion across the wealthiest top 10 percent and bottom 90 percent of households. Source: Tcherneva (2014), published in The New York Times , September 26, 2014. '49- '53 '54- '57 '59- '60 '61- '69 '70- '73 '75- '79 '82- '90 '91- '00 '01- '07 '09- '12 Average Pre-1908 Average Post-1980 Top 10% 20% 28 32 33 43 45 80 73 98 116 34% 92% Bottom 90% 80% 72 68 67 57 55 20 27 2 -16 66% 8%

Figure 6 shows the share of total pre-tax income of the top one percent of households ranked by wealth. From the mid-1930s, with the implementation of the New Deal social contract, that share fell from a high of 23.94 percent in 1928 to a low of 8.95 percent in 1978. Thereafter it has steadily risen, reaching 23.5 percent in 2007 which marked the beginning of the Great Recession. It then fell during the Great Recession owing to a recession-induced fall in profits, but has since recovered most of that decline as income distribution has worsened again during the economic recovery. In effect, during the neoliberal era the US economy has retraced its steps, reversing the improvements achieved by the New Deal and post-World War II prosperity, so that the top one percent's share of pre-tax income has returned to pre-Great Depression levels.

Figure 6. US pre-tax income share of top 1 percent. Source: http://inequality.org/income-inequality/. Original source: Thomas Piketty and Emanuel Saez (2003), updated at http://emlab.edu/users/saez.

As argued in Palley (2012a, p. 150-151) there is close relationship between union membership density (i.e. percent of employed workers that are unionized) and income distribution. This is clearly shown in Figure 7 which shows union density and the share of pre-tax income going to the top ten percent of wealthiest households. The neoliberal labor market flexibility agenda explicitly attacks unions and works to shift income to wealthier households.

Share of income going to the top 10 percent 2013: 47.0% Union membership density 11.2% 0% 10% 20% 30% 40% 50% 60% 1917 1923 1929 1935 1941 1947 1953 1959 1965 1971 1977 1983 1989 1995 2001 2007 2013 Source: Data on union density follows the composite series found in Historical Statistics of the United States; updated to 2013 from unionstats.com. Income inequality (share of income to top 10%) from Piketty and Saez,

"Income Inequality in the United States, 1913-1998, Quarterly Journal of Economics , 118(1), 2003, 1-39. Updated Figure 7. Union membership and the share of income going to the top ten percent of wealthiest households, 1917 – 2013. Source: Mishel, Gould and Bivens (2015). Table 4 provides data on the evolution of the U.S. goods and services trade balance as a share of GDP by business cycle peak. Comparison across peaks controls for the effect of the business cycle. The data show through to the late 1970s U.S. trade was roughly in balance, but after 1980 it swung to massive deficit and the deficits increased each business cycle. These deficits were the inevitable product of the neoliberal model of globalization (Palley, 2015) and they undermined the AD generation process in accordance with the Keynesian hypothesis.

Table 4. The U.S. goods & services trade deficit/surplus by business cycle peaks, 1960 – 2007. Sources: Economic Report of the President, 2009 and author's calculations. Business cycle peak year Trade balance ($ millions) GDP ($ billions) Trade balance/ GDP (%) 1960 3,508 526.4 0.7 1969 91 984.6 0.0 1973 1,900 1,382.7 0.1 1980 -25,500 2,789.5 -0.9 1981 -28,023 3,128.4 -0.9 1990 -111,037 5,803.1 -1.9 2001 -429,519 10,128.0 -4.2 2007 -819,373 13,807.5 -5.9

Finally, Figure 8 shows total domestic debt relative to GDP and growth. This Figure is highly supportive of the Keynesian interpretation of the role of finance. During the neoliberal era real GDP growth has actually slowed but debt growth has exploded. The reason is the neoliberal model did nothing to increase growth, but it needed faster debt growth to fill the demand gap created by the model's worsening of income distribution and creation of large trade deficits. Debt growth supported debt-financed consumer spending and it supported asset price inflation that enabled borrowing which filled the demand gap caused by the neoliberal model. Figure 8. Total domestic debt and growth (1952-2007). Source: Grantham, 2010.

V The debate about the causes of the crisis: why it matters

The importance of the debate about the causes of the crisis is that each perspective recommends its own different policy response. For hardcore neoliberal government failure proponents the recommended policy response is to double-down on the policies described by the neoliberal policy box and further deregulate markets; to deepen central bank independence and the commitment to low inflation via strict rules based monetary policy; and to further shrink government and impose fiscal austerity to deal with increased government debt produced by the crisis For softcore neoliberal market failure proponents the recommended policy response is to tighten financial regulation but continue with all other aspects of the existing neoliberal policy paradigm. That means continued support for corporate globalization, socalled labor market flexibility, low inflation targeting, and fiscal austerity in the long term. Additionally, there is need for temporary large-scale fiscal and monetary stimulus to combat the deep recession caused by the financial crisis.

However, once the economy has recovered, policy should continue with the neoliberal model For proponents of the destruction of shared prosperity hypothesis the policy response is fundamentally different. The fundamental need is to overthrow the neoliberal paradigm and replace it with a "structural Keynesian" paradigm. That involves repacking the policy box as illustrated in Figure 9.

The critical step is to take workers out of the box and put corporations and financial markets in so that they are made to serve a broader public interest. The key elements are to replace corporate globalization with managed globalization that blocks race to the bottom trade dynamics and stabilizes global financial markets; restore a commitment to full employment; replace the neoliberal anti-government agenda with a social democratic government agenda; and replace the neoliberal labor market flexibility with a solidarity based labor market agenda.

The goals are restoration of full employment and restoration of a solid link between wage and productivity growth.

Figure 9. The structural Keynesian box Corporations & Managed Financial Markets Globalization Full Employment Social Democratic Government Solidarity Labor Markets

Lastly, since the neoliberal model was adopted as part of a new global economic order, there is also need to recalibrate the global economy. This is where the issue of "global rebalancing" enters and emerging market economies need to shift away from export-led growth strategies to domestic demand-led strategies. That poses huge challenges for many emerging market economies because they have configured their growth strategies around export-led growth whereby they sell to U.S. consumers.

VI From crisis to stagnation: the failure to change

Massive policy interventions, unequalled in the post-war era, stopped the Great Recession from spiraling into a second Great Depression. The domestic economic interventions included the 2008 Troubled Asset Relief Program (TARP) that bailed out the financial sector via government purchases of assets and equity from financial institutions; the 2009 American Recovery and Reinvestment Act (ARRA) that provided approximately $800 billion of fiscal stimulus, consisting of approximately $550 billion of government spending and $250 billion of tax cuts; the Federal Reserve lowering its interest target to near-zero (0 - 0.25 percent); and the Federal Reserve engaging in quantitative easing (QE) transactions that involve it purchasing government and private sector securities. At the international level, in 2008 the Federal Reserve established a temporary $620 billion foreign exchange (FX) swap facility with foreign central banks.

That facility provided the global economy with dollar balances, thereby preventing a dollar liquidity shortage from triggering a wave of global default on short-term dollar loans that the financial system was unwilling to roll-over because of panic.3

Additionally, there was unprecedented globally coordinated fiscal stimulus arranged via the G-20 mechanism. 3

The FX swaps with foreign central banks have been criticized as being a bail-out for foreign economies. In fact, they saved the US financial system which would have been pulled down by financial collapse outside

Despite their scale, these interventions did not stop the recession from being the deepest since 1945, and nor did they stop the onset of stagnation. Table 5 shows how GDP growth has failed to recover since the end of the Great Recession, averaging just 2.1 percent for the five year period from 2010 – 2014. Furthermore, that period includes the rebound year of 2010 when the economy rebounded from its massive slump owing to the extraordinary fiscal and monetary stimulus measures that were put in place

Table 5. U.S. GDP growth. Source: Statistical Annex of the European Union, Autumn 2014 and author's calculations.

The growth rate for 2014 is that estimated in October 2014.

1961 - 1970 1971 - 1980 1981 - 1990 1991 - 2000 2001 - 2007 2008 - 2009 2010 - 2014

4.2% 3.2% 3.3% 3.5% 2.5% -1.6% 2.1%

Table 6 shows employment creation in the five years after the end of recessions, which provides another window on stagnation. The job creation numbers show that the neoliberal model was already slowing in the 1990s with the first episode of "jobless the US.

Many foreign banks operating in the US had acquired US assets financed with short-term dollar borrowings. When the US money market froze in 2008 they could not roll-over these loans in accordance with normal practice. That threatened massive default by these banks within the US financial system, which would have pulled down the entire global financial system.

The Federal Reserve could not lend directly to these foreign banks and their governing central banks lacked adequate dollar liquidity to fill the financing gap. The solution was to lend dollars to foreign central banks, which then made dollar loans to foreign banks in need of dollar roll-over short-term financing. recovery".

It actually ground to stagnation in the 2001 – 2007 period, but this was masked by the house price bubble and the false prosperity it created. Stagnation has persisted after the Great Recession, but the economic distress caused by the recession has finally triggered awareness of stagnation among elites economists. In a sense, the Great Recession called out the obvious, just as did the little boy in the Hans Anderson story about the emperor's new suit

Table 6. U.S. private sector employment creation in the five year period after the end of recessions for six business cycles with extended expansions. Source: Bureau of labor statistics and author's calculations. * = January 1980 the beginning of the next recession Recession end date Employment at recession end date (millions) Employment five years later (millions) Percent growth in employment Feb 1961 45.0 52.2 16.0% Mar 1975 61.9 74.6* 20.5% Nov 1982 72.8 86.1 18.3% March 1991 90.1 99.5 10.4% Nov 2001 109.8 115.0 4.7% June 2009 108.4 117.1 8.0% The persistence of stagnation after the Great Recession raises the question "why"? The answer is policy has done nothing to change the structure of the underlying neoliberal economic model.

That model inevitably produces stagnation because it produces a structural demand shortage via (i) its impact on income distribution, and (ii) via its design of globalization which generates massive trade deficits, wage competition and off-shoring of jobs and investment. In terms of the three-way contest between the government failure hypothesis, the market failure hypothesis and the destruction of shared prosperity hypothesis, the economic policy debate during the Great Recession was cast as exclusively between government failure and market failure.

With the Democrats controlling the Congress and Presidency after the 2008 election, the market failure hypothesis won out and has framed policy since then. According to the hypothesis, the financial crisis caused an exceptionally deep recession that required exceptionally large monetary and fiscal stimulus to counter it and restore normalcy. Additionally, the market failure hypothesis recommends restoring and renovating financial regulation, but other than that the neoliberal paradigm is appropriate and should be deepened In accordance with this thinking, the in-coming Obama administration affirmed existing efforts to save the system and prevent a downward spiral by supporting the Bush administration's TARP, the Federal Reserve's first round of QE (November/December 2008) that provided market liquidity, and the Federal Reserve's FX swap agreement with foreign central banks

Thereafter, the Obama administration worked to reflate the economy via passage of the ARRA (2009) which provided significant fiscal stimulus. With the failure to deliver a V-shaped recovery, candidate Obama became even more vocal about fiscal stimulus However, reflecting its softcore neoliberal inclinations, the Obama administration then became much less so when it took office. Thus, the winners of the internal debate about fiscal policy in the first days of the Obama administration were those wanting more modest fiscal stimulus.4 Furthermore, its analytical frame was one of temporary stimulus with the 4 Since 2009 there has been some evolution of policy positions characterized by a shift to stronger support for fiscal stimulus. This has been especially marked in Larry Summers, who was the Obama administration's goal of long-term fiscal consolidation, which is softcore neoliberal speak for fiscal austerity Seen in the above light, after the passage of ARRA (2009), the fiscal policy divide between the Obama administration and hardcore neoliberal Republicans was about the speed and conditions under which fiscal austerity should be restored.

This attitude to fiscal policy reflects the dominance within the Democratic Party of "Rubinomics", the Wall Street view associated with former Treasury Secretary Robert Rubin, that government spending and budget deficits raise real interest rates and thereby lower growth. According to that view, the US needs long-term fiscal austerity to offset Social Security and Medicare Side-by-side with the attempt to reflate the economy, the Obama administration also pushed for major overhaul and tightening of financial sector regulation via the Dodd- Frank Act (2010).

That accorded with the market failure hypothesis's claim about the economic crisis and Great Recession being caused by financial excess permitted by the combination of excessive deregulation, lax regulation and failure to modernize regulation Finally, and again in accordance with the logic of the market failure hypothesis, the Obama administration has pushed ahead with doubling-down and further entrenching the neoliberal policy box. This is most visible in its approach to globalization. In 2010, free trade agreements modelled after NAFTA were signed with South Korea, Colombia and Panama. The Trans-Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment Partnership (TTIP), two mega-agreements negotiated in secrecy and apparently bearing chief economic adviser when it took office. This shift has become a way of rewriting history by erasing the memory of initial positions. That is also true of the IMF which in 2010-2011 was a robust supporter of fiscal consolidation in Europe. similar hallmarks to prior trade agreements, are also being pushed by the Obama administration

The Obama administration's softcore neoliberalism would have likely generated stagnation by itself, but the prospect has been further strengthened by Republicans.

Thus, in accordance with their point of view, Republicans have persistently pushed the government failure hypothesis by directing the policy conversation to excessive regulation and easy monetary policy as the causes of the crisis. Consequently, they have consistently opposed strengthened financial regulation and demands for fiscal stimulus.

At the same time, they have joined with softcore neoliberal Democrats regarding doubling-down on neoliberal box policies, particularly as regards trade and globalization Paradoxically, the failure to change the overall economic model becomes most visible by analyzing the policies of the Federal Reserve, which have changed the most dramatically via the introduction of QE. The initial round of QE (QE1) was followed by QE2 in November 2010 and QE3 in September 2012, with the Fed shifting from providing short-term emergency liquidity to buying private sector financial assets.

The goal was to bid up prices of longer term bonds and other securities, thereby lowering interest rates on longer-term financing and encouraging investors to buy equities and other riskier financial assets. The Fed's reasoning was lower long-term rates would stimulate the economy, and higher financial asset prices would trigger a positive wealth effect on consumption spending. This makes clear the architecture of policy.

The Obama administration was to provide fiscal stimulus to jump start the economy; the Fed would use QE to blow air back into the asset price bubble; the Dodd-Frank Act (2010) would stabilize financial markets; and globalization would be deepened by further NAFTA-styled international agreements. This is a near-identical model to that which failed so disastrously. Consequently, stagnation is the logical prognosis.

VII Déjà vu all over again: back to the 1990s but with a weaker economy

The exclusion of the destruction of shared prosperity hypothesis, combined with the joint triumph of the market failure and government failure hypotheses, means the underlying economic model that produced the Great Recession remains essentially unchanged. That failure to change explains stagnation. It also explains why current conditions smack of "déjà vu all over again" with the US economy in 2014-15 appearing to have returned to conditions reminiscent of the mid-1990s.

Just as the 1990s failed to deliver durable prosperity, so too current optimistic conditions will prove unsustainable absent deeper change The déjà vu similarities are evident

All of these features mean both policy context and policy design look a lot like the mid-1990s. The Obama administration saved the system but did not change it

Consequently, the economy is destined to repeat the patterns of the 1990s and 2000s. However, the US economy has also experienced almost twenty more years of neoliberalism which has left its economic body in worse health than the 1990s. That means the likelihood of delivering another bubble-based boom is low and stagnation tendencies will likely reassert themselves after a shorter and weaker period of expansion

This structurally weakened state of the US economy is evident in the further worsening of income inequality that has occurred during the Great Recession and subsequent slow recovery.

... ... ...

Thomas I. Palley, Senior Economic Policy Advisor, AFL-CIO Washington, D.C. mail@thomaspalley.com

[Oct 09, 2017] Instead of drawing the best and the brightest, or being a place where scholarship was valued, where students were taught critical thinking skills, the University I attended was nothing more than an expensive diploma mill for the children of the wealthy

Chris Hedges published this book eight years ago and the things he predicted have sadly been realized
Notable quotes:
"... his screed is a liberating tonic against the crazy-making double-speak and the lies Americans are sold by our country's elite in order to distract us from the true threat and nature of the Corporate State, from the cult of celebrity, to how our nation's Universities have been hijacked to serve the interests, not of the public, but of our corporate overlords. It explains the self-same conditions in all aspects of our society and culture that we now must face, the ever-shrinking flame of enlightenment being exchanged for the illusory shadows on a cave wall. ..."
"... He fearlessly and incisively calls us out on the obvious farce our democracy has become, how we got here, and highlights the rapidly closing window in which we have to do something to correct it. It is a revelation, and yet he merely states the obvious. The empire has no clothes. ..."
"... One of the most powerful aspects of this book was in regard to how our Universities are run these days. I may be in the minority, but I experienced a life-changing disillusionment when I gained entrance to a prestigious "elite" University. Instead of drawing the best and the brightest, or being a place where scholarship was valued, where students were taught critical thinking skills, the University I attended was nothing more than an expensive diploma mill for the children of the wealthy. In the eyes of the University, students were not minds to be empowered and developed, but walking dollar signs. ..."
"... Instead of critical thinking, students were taught to OBEY, not to question authority, and then handed a piece of paper admitting them to the ruling class that is destroying America without a moral compass. Selfishness, deceit, disregard for the common good, and a win-at-all-costs attitude were rewarded. Empathy, curiosity, dissent, and an honest, intellectually rigorous evaluation of ourselves and our world were punished. Obviously I am not the only one to whom this was cause to fear for the future of our country. ..."
Oct 09, 2017 | www.amazon.com

H. I. on May 13, 2011

This Book Explains EVERYTHING!!!!!

Hedges cogently and systematically dismantles the most pernicious cultural delusions of our era and lays bare the pitiful truths that they attempt to mask. This book is a deprogramming manual that trims away the folly and noise from our troubled society so that the reader can focus on the most pressing matters of our time.

Despite the dark reality Hedges excavates, his screed is a liberating tonic against the crazy-making double-speak and the lies Americans are sold by our country's elite in order to distract us from the true threat and nature of the Corporate State, from the cult of celebrity, to how our nation's Universities have been hijacked to serve the interests, not of the public, but of our corporate overlords. It explains the self-same conditions in all aspects of our society and culture that we now must face, the ever-shrinking flame of enlightenment being exchanged for the illusory shadows on a cave wall.

As a twenty-something caught in the death-throes of American Empire and culture, I have struggled to anticipate where our country and our world are heading, why, and what sort of life I can expect to build for myself. Hedges presents the reader with the depressing, yet undeniable truth of the forces that have coalesced to shape the world in which we now find ourselves. The light he casts is searing and relentless. He fearlessly and incisively calls us out on the obvious farce our democracy has become, how we got here, and highlights the rapidly closing window in which we have to do something to correct it. It is a revelation, and yet he merely states the obvious. The empire has no clothes.

One of the most powerful aspects of this book was in regard to how our Universities are run these days. I may be in the minority, but I experienced a life-changing disillusionment when I gained entrance to a prestigious "elite" University. Instead of drawing the best and the brightest, or being a place where scholarship was valued, where students were taught critical thinking skills, the University I attended was nothing more than an expensive diploma mill for the children of the wealthy. In the eyes of the University, students were not minds to be empowered and developed, but walking dollar signs.

Instead of critical thinking, students were taught to OBEY, not to question authority, and then handed a piece of paper admitting them to the ruling class that is destroying America without a moral compass. Selfishness, deceit, disregard for the common good, and a win-at-all-costs attitude were rewarded. Empathy, curiosity, dissent, and an honest, intellectually rigorous evaluation of ourselves and our world were punished. Obviously I am not the only one to whom this was cause to fear for the future of our country.

Five stars is not enough. Ever since I began reading Empire of Illusion, I have insisted friends and family pick up a copy, too. Everyone in America should read this incredibly important book.

The truth shall set us free.

[Oct 09, 2017] Amazon.com Empire of Illusion The End of Literacy and the Triumph of Spectacle by Chris Hedges

Chris Hedges published this book eight years ago and the things he predicted have sadly been realized
Notable quotes:
"... his screed is a liberating tonic against the crazy-making double-speak and the lies Americans are sold by our country's elite in order to distract us from the true threat and nature of the Corporate State, from the cult of celebrity, to how our nation's Universities have been hijacked to serve the interests, not of the public, but of our corporate overlords. It explains the self-same conditions in all aspects of our society and culture that we now must face, the ever-shrinking flame of enlightenment being exchanged for the illusory shadows on a cave wall. ..."
"... He fearlessly and incisively calls us out on the obvious farce our democracy has become, how we got here, and highlights the rapidly closing window in which we have to do something to correct it. It is a revelation, and yet he merely states the obvious. The empire has no clothes. ..."
"... One of the most powerful aspects of this book was in regard to how our Universities are run these days. I may be in the minority, but I experienced a life-changing disillusionment when I gained entrance to a prestigious "elite" University. Instead of drawing the best and the brightest, or being a place where scholarship was valued, where students were taught critical thinking skills, the University I attended was nothing more than an expensive diploma mill for the children of the wealthy. In the eyes of the University, students were not minds to be empowered and developed, but walking dollar signs. ..."
"... Instead of critical thinking, students were taught to OBEY, not to question authority, and then handed a piece of paper admitting them to the ruling class that is destroying America without a moral compass. Selfishness, deceit, disregard for the common good, and a win-at-all-costs attitude were rewarded. Empathy, curiosity, dissent, and an honest, intellectually rigorous evaluation of ourselves and our world were punished. Obviously I am not the only one to whom this was cause to fear for the future of our country. ..."
"... The chapter involving the porn trade that is run by large corporations such as AT&T and GM (the car maker, for crying out loud) was an especially dark, profanity-laced depiction of the abuse and moral decay of American society . ..."
"... He is correct in his belief that the continual barrage of psuedo-events and puffery disguised as news (especially television) has conditioned most of Americans to be non-critical thinkers. ..."
"... Entertainment, consumption and the dangerous illusion that the U.S. is the best in the world at everything are childish mindsets. ..."
"... The are the puppet masters." As extreme as that is, he is more credible when he says, "Commodities and celebrity culture define what it means to belong, how we recognize our place in society, and how we conduct our lives." I say 'credible' because popular and mass culture's influence are creating a world where substance is replaced by questionable style. ..."
"... Celebrity and connectivity are both ways of becoming known. This is what the contemporary self wants. It wants to be recognized, wants to be connected: It wants to be visible. If not to the millions, on Survivor or Oprah, then to the hundreds, on Twitter or Facebook. ..."
"... Visibility has replaced substance and accomplishment; packaging over product, sizzle not steak. Chris Rojek calls this "the cult of distraction" where society is consumed by the vacuous and the vapid rather than striving for self-awareness, accomplishment and contribution ("Propaganda has become a substitute for ideas and ideology."). Hedges builds on Rojek's descriptor by suggesting we are living in a "culture of illusion" which impoverishes language, makes us childlike, and is basically dumbing us all down. ..."
"... Today's delusionary and corrupted officials, corporate and government, are reminiscent of the narratives penned by Charles Dickens. Alexander Hamilton referred to the masses as a "great beast" to be kept from the powers of government. ..."
"... Edmund Burke used propaganda to control "elements of society". Walter Lippmann advised that "the public must be kept in its place". Yet, many Americans just don't get it. ..."
"... Divide and conquer is the mantra--rich vs. poor; black vs. white. According to Norm Chomsky's writings, "In 1934, William Shepard argued that government should be in the hands of `aristocracy and intellectual power' while the `ignorant, and the uninformed and the antisocial element' must not be permitted to control elections...." ..."
"... The appalling statistics and opinions outlined in the book demonstrate the public ignorance of the American culture; the depth and extent of the corporatocracy and the related economic malaise; and, the impact substandard schools have on their lives. ..."
"... This idea was recently usurped by the U.S. Supreme Court where representative government is called to question, rendering "our" consent irrelevant. Every voting election is an illusion. Each election, at the local and national level, voters never seemingly "miss an opportunity to miss an opportunity" to eliminate irresponsible and unresponsive officials. ..."
"... Walt Kelly's quote "We have met the enemy and he is us" prevails! ..."
"... It's also hard to follow at times as Hedges attempts to stress the connections between pop culture and social, political. and economic policy. Nor is Hedges a particularly stylish writer (a sense of humor would help). ..."
"... The stomach-turning chapter on trends in porn and their relationship to the torture of prisoners of war is a particularly sharp piece of analysis, and all of the other chapters do eventually convince (and depress). ..."
Oct 09, 2017 | www.amazon.com

H. I. on May 13, 2011

This Book Explains EVERYTHING!!!!!

Hedges cogently and systematically dismantles the most pernicious cultural delusions of our era and lays bare the pitiful truths that they attempt to mask. This book is a deprogramming manual that trims away the folly and noise from our troubled society so that the reader can focus on the most pressing matters of our time.

Despite the dark reality Hedges excavates, his screed is a liberating tonic against the crazy-making double-speak and the lies Americans are sold by our country's elite in order to distract us from the true threat and nature of the Corporate State, from the cult of celebrity, to how our nation's Universities have been hijacked to serve the interests, not of the public, but of our corporate overlords. It explains the self-same conditions in all aspects of our society and culture that we now must face, the ever-shrinking flame of enlightenment being exchanged for the illusory shadows on a cave wall.

As a twenty-something caught in the death-throes of American Empire and culture, I have struggled to anticipate where our country and our world are heading, why, and what sort of life I can expect to build for myself. Hedges presents the reader with the depressing, yet undeniable truth of the forces that have coalesced to shape the world in which we now find ourselves. The light he casts is searing and relentless. He fearlessly and incisively calls us out on the obvious farce our democracy has become, how we got here, and highlights the rapidly closing window in which we have to do something to correct it. It is a revelation, and yet he merely states the obvious. The empire has no clothes.

One of the most powerful aspects of this book was in regard to how our Universities are run these days. I may be in the minority, but I experienced a life-changing disillusionment when I gained entrance to a prestigious "elite" University. Instead of drawing the best and the brightest, or being a place where scholarship was valued, where students were taught critical thinking skills, the University I attended was nothing more than an expensive diploma mill for the children of the wealthy. In the eyes of the University, students were not minds to be empowered and developed, but walking dollar signs.

Instead of critical thinking, students were taught to OBEY, not to question authority, and then handed a piece of paper admitting them to the ruling class that is destroying America without a moral compass. Selfishness, deceit, disregard for the common good, and a win-at-all-costs attitude were rewarded. Empathy, curiosity, dissent, and an honest, intellectually rigorous evaluation of ourselves and our world were punished. Obviously I am not the only one to whom this was cause to fear for the future of our country.

Five stars is not enough. Ever since I began reading Empire of Illusion, I have insisted friends and family pick up a copy, too. Everyone in America should read this incredibly important book.

The truth shall set us free.

By Franklin the Mouse on February 5, 2012

Dream Weavers

Mr. Hedges is in one heck of a foul mood. His raging against the evolving of American democracy into an oligarchy is accurate, but relentlessly depressing. The author focuses on some of our most horrid characteristics: celebrity worship; "pro" wrestling; the brutal porn industry; Jerry Springer-like shows; the military-industrial complex; the moral void of elite colleges such as Yale, Harvard, Berkeley and Princeton; optimistic-ladened pop psychology; and political/corporate conformity.

Mr. Hedges grim assessment put me in a seriously foul mood. The chapter involving the porn trade that is run by large corporations such as AT&T and GM (the car maker, for crying out loud) was an especially dark, profanity-laced depiction of the abuse and moral decay of American society .

He is correct in his belief that the continual barrage of psuedo-events and puffery disguised as news (especially television) has conditioned most of Americans to be non-critical thinkers.

Entertainment, consumption and the dangerous illusion that the U.S. is the best in the world at everything are childish mindsets.

The oddest part of Mr. Hedges' book is the ending. The last three pages take such an unexpectedly hard turn from "all is lost" to "love will conquer," I practically got whiplash. Overall, the author should be commended for trying to bring our attention to what ails our country and challenging readers to wake up from their child-like illusions.

Now, time for me to go run a nice, warm bath and where did I put those razor blades?...

By Walter E. Kurtz on September 25, 2011
Amazing book

I must say I was captivated by the author's passion, eloquence and insight. This is not an academic essay. True, there are few statistics here and there and quotes from such and such person, but this is not like one of those books that read like a longer version of an academic research paper. The book is more of author's personal observations about American society. Perhaps that is where its power comes from.

Some might dismiss the book as nothing more than an opinion piece, but how many great books and works out there are opinion pieces enhanced with supporting facts and statistics?

The book is divided into five chapters. Chapter one is about celebrity worship and how far people are willing to humiliate themselves and sacrifice their dignity for their five minutes of fame. But this is not just about those who are willing to make idiots out of themselves just to appear on television. This is about how the fascination with the world of rich and famous distracts the society from the important issues and problems and how it creates unhealthy and destructive desire to pursue wealth and fame. And even for those few who do achieve it, their lives are far from the bliss and happiness shown in movies. More than one celebrity had cursed her life.

Chapter two deals with porn. It offers gutwrenching, vomit inducing descriptions of lives and conditions in the porn industry. But the damage porn does goes far beyond those working in the "industry". Porn destroys the love, intimacy and beauty of sex. Porn reduces sex to an act of male dominance, power and even violence. Unfortunately, many men, and even women, buy into that and think that the sex seen in porn is normal and this is how things should be.

After reading this chapter, I will never look at porn the same way again. In fact, I probably will never look at porn at all.

Chapter three is about education. It focuses mostly on college level education and how in the past few decades it had increasingly changed focus from teaching students how to be responsible citizens and good human beings to how to be successful, profit seeking, career obsessed corporate/government drones. The students are taught that making money and career building are the only thing that matters. This results in professionals who put greed and selfishness above everything else and mindlessly serve a system that destroys the society and the whole planet. And when they are faced with problems (like the current economic crisis) and evidence that the system is broken, rather than rethink their paradigm and consider that perhaps they were wrong, they retreat further into old thinking in search of ways to reinforce the (broken) system and keep it going.
Chapter four is my favorite. It is about positive thinking. As someone who lives with a family member who feeds me positive thinking crap at breakfast, lunch and supper, I enjoyed this chapter very much. For those rare lucky few who do not know what positive thinking is, it can be broadly defined as a belief that whatever happens to us in life, it happens because we "attracted" it to ourselves. Think about it as karma that affects us not in the next life, but in this one. The movement believes that our conscious and unconscious thoughts affect reality. By assuming happy, positive outlook on life, we can affect reality and make good things happen to us.

Followers of positive thinking are encouraged/required to purge all negative emotions, never question the bad things that happen to them and focus on thinking happy thoughts. Positive thinking is currently promoted by corporations and to lesser extent governments to keep employees in line. They are rendered docile and obedient, don't make waves (like fight for better pay and working conditions) and, when fired, take it calmly with a smile and never question corporate culture.

Chapter five is about American politics and how the government and the politicians had sold themselves out to corporations and business. It is about imperialism and how the government helps the corporations loot the country while foreign wars are started under the pretext of defense and patriotism, but their real purpose is to loot the foreign lands and fill the coffers of war profiteers. If allowed to continue, this system will result in totalitarianism and ecological apocalypse.

I have some objections with this chapter. While I completely agree about the current state of American politics, the author makes a claim that this is a relatively recent development dating roughly to the Vietnam War. Before that, especially in the 1950s, things were much better. Or at least they were for the white men. (The author does admit that 1950s were not all that great to blacks, women or homosexuals.)

While things might have gotten very bad in the last few decades, politicians and governments have always been more at the service of Big Money rather than the common people.

And Vietnam was not the first imperialistic American war. What about the conquest of Cuba and Philippines at the turn of the 20th century? And about all those American "adventures" in South America in the 19th century. And what about the westward expansion and extermination of Native Americans that started the moment the first colonists set their foot on the continent?

But this is a minor issue. My biggest issue with the book is that it is a powerful denunciation, but it does not offer much in terms of suggestions on how to fix the problems it is decrying. Criticizing is good and necessary, but offering solutions is even more important. You can criticize all you want, but if you cannot suggest something better, then the old system will stay in place.

The author does write at the end a powerful, tear inducing essay on how love conquers all and that no totalitarian regime, no matter how powerful and oppressive, had ever managed to crush hope, love and the human spirit. Love, in the end, conquers all.

That is absolutely true. But what does it mean in practice? That we must keep loving and doing good? Of course we must, but some concrete, practical examples of what to do would be welcome.

By Richard Joltes on July 18, 2016
An excellent and sobering view at the decline of reason and literacy in modern society

This is an absolutely superb work that documents how our society has been subverted by spectacle, glitz, celebrity, and the obsession with "fame" at the expense of reality, literacy, reason, and actual ability. Hedges lays it all out in a very clear and thought provoking style, using real world examples like pro wrestling and celebrity oriented programming to showcase how severely our society has declined from a forward thinking, literate one into a mass of tribes obsessed with stardom and money.

Even better is that the author's style is approachable and non judgemental. This isn't an academic talking down to the masses, but a very solid reporter presenting findings in an accurate, logical style.

Every American should read this, and then consider whether to buy that glossy celebrity oriented magazine or watch that "I want to be a millionaire" show. The lifestyle and choices being promoted by the media, credit card companies, and by the celebrity culture in general, are toxic and a danger to our society's future.

By Jeffrey Swystun on June 29, 2011
What does the contemporary self want?

The various ills impacting society graphically painted by Chris Hedges are attributed to a lack of literacy. However, it is much more complex, layered, and inter-related. By examining literacy, love, wisdom, happiness, and the current state of America, the author sets out to convince the reader that our world is intellectually crumbling. He picks aspects of our society that clearly offer questionable value: professional wrestling, the pornographic film industry (which is provided in bizarre repetitive graphic detail), gambling, conspicuous consumption, and biased news reporting to name a few.

The front of the end of the book was the most compelling. Especially when Hedges strays into near conspiracy with comments such as this: "Those who manipulate the shadows that dominate our lives are the agents, publicists, marketing departments, promoters, script writers, television and movie producers, advertisers, video technicians, photographers, bodyguards, wardrobe consultants, fitness trainers, pollsters, public announcers, and television news personalities who create the vast stage for illusion. The are the puppet masters." As extreme as that is, he is more credible when he says, "Commodities and celebrity culture define what it means to belong, how we recognize our place in society, and how we conduct our lives." I say 'credible' because popular and mass culture's influence are creating a world where substance is replaced by questionable style.

What resonated most in the book is a passage taken from William Deresiewicz's essay The End of Solitude: "What does the contemporary self want? The camera has created a culture of celebrity; the computer is creating a culture of connectivity. As the two technologies converge -- broadband tipping the Web from text to image, social-networking sites spreading the mesh of interconnection ever wider -- the two cultures betray a common impulse.

Celebrity and connectivity are both ways of becoming known. This is what the contemporary self wants. It wants to be recognized, wants to be connected: It wants to be visible. If not to the millions, on Survivor or Oprah, then to the hundreds, on Twitter or Facebook. This is the quality that validates us, this is how we become real to ourselves -- by being seen by others. The great contemporary terror is anonymity. If Lionel Trilling was right, if the property that grounded the self, in Romanticism, was sincerity, and in modernism it was authenticity, then in postmodernism it is visibility."

Visibility has replaced substance and accomplishment; packaging over product, sizzle not steak. Chris Rojek calls this "the cult of distraction" where society is consumed by the vacuous and the vapid rather than striving for self-awareness, accomplishment and contribution ("Propaganda has become a substitute for ideas and ideology."). Hedges builds on Rojek's descriptor by suggesting we are living in a "culture of illusion" which impoverishes language, makes us childlike, and is basically dumbing us all down.

This is definitely a provocative contribution and damning analysis of our society that would be a great choice for a book club. It would promote lively debate as conclusions and solutions are not easily reached.

By S. Arch on July 10, 2011
A book that needs to be read, even if it's only half true.

Empire of Illusion might be the most depressing book I've ever read. Why? Because it predicts the collapse of America and almost every word of it rings true.

I don't know if there's really anything new here; many of the ideas Hedges puts forth have been floating around in the neglected dark corners of our national discourse, but Hedges drags them all out into the daylight. Just about every social/cultural/economic/political ill you can think of is mentioned at some point in the text and laid at the feet of the villains whose insatiable greed has destroyed this once-great country. Hedges is bold. He predicts nothing less than the end of America. Indeed, he claims America has already ended. The American Dream is nothing more than an illusion being propped up by wealthy elites obsessed with power and the preservation of their lifestyle, a blind academia that has forgotten how to critique authority, and a government that is nothing more than the puppet of corporations. Meanwhile, mindless entertainments and a compliant news media divert and mislead the working and middle classes so they don't even notice that they are being raped to death by the power-elite and the corporations.

(Don't misunderstand. This is no crack-pot conspiracy theory. It's not about secret quasi-mystical cabals attempting world domination. Rather, Hedges paints a credible picture of our culture in a state of moral and intellectual decay, and leaders corrupted by power and greed who have ceased to act in the public interest.)

At times Hedges seems to be ranting and accusing without providing evidence or examples to substantiate his claims. But that might only be because his claims have already been substantiated individually elsewhere, and Hedges's purpose here is a kind of grand synthesis of many critical ideas. Indeed, an exhaustive analysis of all the issues he brings forth would require volumes rather than a single book. In any case, I challenge anyone to read this book, look around honestly at what's happening in America, and conclude that Hedges is wrong.

One final note: this book is not for the squeamish. The chapter about pornography is brutally explicit. Still, I think it is an important book, and it would be good if a lot more people would read it, discuss it, and thereby become dis-illusioned.

By Bruce E. McLeod Jr. on February 11, 2012
Thorough and illuminating

Chris Hedges book, "Empire of Illusion" is a stinging assessment and vivid indictment of America's political and educational systems; a well-told story. I agree with his views but wonder how they can be reversed or transformed given the economic hegemony of the corporations and the weight of the entrenched political parties. Very few solutions were provided.

Corporations will continue to have a presence and set standards within the halls of educational and governmental institutions with impunity. Limited monetary measures, other than governmental, exist for public educational institutions, both secondary and post-secondary. Historically, Roman and Greek political elitists operated in a similar manner and may have set standards for today's plutocracy. Plebeian societies were helpless and powerless, with few options, to enact change against the political establishment. Given the current conditions, America is on a downward spiral to chaos.

His book is a clarion call for action. Parents and teachers have warned repeatedly that too much emphasis is placed on athletic programs at the expense of academics. Educational panels, books and other experts have done little to reform the system and its intransigent administrators.

Today's delusionary and corrupted officials, corporate and government, are reminiscent of the narratives penned by Charles Dickens. Alexander Hamilton referred to the masses as a "great beast" to be kept from the powers of government.

Edmund Burke used propaganda to control "elements of society". Walter Lippmann advised that "the public must be kept in its place". Yet, many Americans just don't get it.

They continue to be hood-winked by politicians using uncontested "sound bites" and "racially-coded" phrases to persuade voters.

Divide and conquer is the mantra--rich vs. poor; black vs. white. According to Norm Chomsky's writings, "In 1934, William Shepard argued that government should be in the hands of `aristocracy and intellectual power' while the `ignorant, and the uninformed and the antisocial element' must not be permitted to control elections...."

The appalling statistics and opinions outlined in the book demonstrate the public ignorance of the American culture; the depth and extent of the corporatocracy and the related economic malaise; and, the impact substandard schools have on their lives. This is further exemplified by Jay Leno's version of "Jaywalking". On the streets, he randomly selects passersby to interview, which seems to validate much of these charges.

We are all culpable. We are further susceptible to illusions. John Locke said, "Government receives its just powers from the consent of the governed".

This idea was recently usurped by the U.S. Supreme Court where representative government is called to question, rendering "our" consent irrelevant. Every voting election is an illusion. Each election, at the local and national level, voters never seemingly "miss an opportunity to miss an opportunity" to eliminate irresponsible and unresponsive officials.

Walt Kelly's quote "We have met the enemy and he is us" prevails!

By Richard Steiger on January 14, 2012
Powerful in spite of itself

There are many flaws with Hedges' book. For one thing, he is given to writing sermons (his father was a minister), hurling down denunciations in the manner of the prophet Amos. The book also tends to be repetitious, as Hedges makes the same general statements over and over. It's also hard to follow at times as Hedges attempts to stress the connections between pop culture and social, political. and economic policy. Nor is Hedges a particularly stylish writer (a sense of humor would help).

His last-second "happy ending" (something like: we're all doomed, but eventually, somewhere down the line, love will prevail beacuse it's ultimately the strongest power on earth) is, to say the least, unconvincing.

SO why am I recommending this book? Because in spite of its flaws (and maybe even because of them), this is a powerful depiction of the state of American society. The book does get to you in its somewhat clumsy way.

The stomach-turning chapter on trends in porn and their relationship to the torture of prisoners of war is a particularly sharp piece of analysis, and all of the other chapters do eventually convince (and depress).

This book will not exactly cheer you up, but at least it will give you an understanding of where we are (and where we're heading).

[Oct 08, 2017] THE CRISIS OF NEOLIBERALISM by Julie A. Wilson

Highly recommended!
Notable quotes:
"... While the Tea Party was critical of status-quo neoliberalism -- especially its cosmopolitanism and embrace of globalization and diversity, which was perfectly embodied by Obama's election and presidency -- it was not exactly anti-neoliberal. Rather, it was anti-left neoliberalism-, it represented a more authoritarian, right [wing] version of neoliberalism. ..."
"... Within the context of the 2016 election, Clinton embodied the neoliberal center that could no longer hold. Inequality. Suffering. Collapsing infrastructures. Perpetual war. Anger. Disaffected consent. ..."
"... Both Sanders and Trump were embedded in the emerging left and right responses to neoliberalism's crisis. Specifically, Sanders' energetic campaign -- which was undoubtedly enabled by the rise of the Occupy movement -- proposed a decidedly more "commongood" path. Higher wages for working people. Taxes on the rich, specifically the captains of the creditocracy. ..."
"... In other words, Trump supporters may not have explicitly voted for neoliberalism, but that's what they got. In fact, as Rottenberg argues, they got a version of right neoliberalism "on steroids" -- a mix of blatant plutocracy and authoritarianism that has many concerned about the rise of U.S. fascism. ..."
"... We can't know what would have happened had Sanders run against Trump, but we can think seriously about Trump, right and left neoliberalism, and the crisis of neoliberal hegemony. In other words, we can think about where and how we go from here. As I suggested in the previous chapter, if we want to construct a new world, we are going to have to abandon the entangled politics of both right and left neoliberalism; we have to reject the hegemonic frontiers of both disposability and marketized equality. After all, as political philosopher Nancy Fraser argues, what was rejected in the election of 2016 was progressive, left neoliberalism. ..."
"... While the rise of hyper-right neoliberalism is certainly nothing to celebrate, it does present an opportunity for breaking with neoliberal hegemony. We have to proceed, as Gary Younge reminds us, with the realization that people "have not rejected the chance of a better world. They have not yet been offered one."' ..."
Oct 08, 2017 | www.amazon.com

Quote from the book is courtesy of Amazon preview of the book Neoliberalism (Key Ideas in Media & Cultural Studies)

In Chapter 1, we traced the rise of our neoliberal conjuncture back to the crisis of liberalism during the late nineteenth and early twentieth centuries, culminating in the Great Depression. During this period, huge transformations in capitalism proved impossible to manage with classical laissez-faire approaches. Out of this crisis, two movements emerged, both of which would eventually shape the course of the twentieth century and beyond. The first, and the one that became dominant in the aftermath of the crisis, was the conjuncture of embedded liberalism. The crisis indicated that capitalism wrecked too much damage on the lives of ordinary citizens. People (white workers and families, especially) warranted social protection from the volatilities and brutalities of capitalism. The state's public function was expanded to include the provision of a more substantive social safety net, a web of protections for people and a web of constraints on markets. The second response was the invention of neoliberalism. Deeply skeptical of the common-good principles that undergirded the emerging social welfare state, neoliberals began organizing on the ground to develop a "new" liberal govemmentality, one rooted less in laissez-faire principles and more in the generalization of competition and enterprise. They worked to envision a new society premised on a new social ontology, that is, on new truths about the state, the market, and human beings. Crucially, neoliberals also began building infrastructures and institutions for disseminating their new' knowledges and theories (i.e., the Neoliberal Thought Collective), as well as organizing politically to build mass support for new policies (i.e., working to unite anti-communists, Christian conservatives, and free marketers in common cause against the welfare state). When cracks in embedded liberalism began to surface -- which is bound to happen with any moving political equilibrium -- neoliberals were there with new stories and solutions, ready to make the world anew.

We are currently living through the crisis of neoliberalism. As I write this book, Donald Trump has recently secured the U.S. presidency, prevailing in the national election over his Democratic opponent Hillary Clinton. Throughout the election, I couldn't help but think back to the crisis of liberalism and the two responses that emerged. Similarly, after the Great Recession of 2008, we've saw two responses emerge to challenge our unworkable status quo, which dispossesses so many people of vital resources for individual and collective life. On the one hand, we witnessed the rise of Occupy Wall Street. While many continue to critique the movement for its lack of leadership and a coherent political vision, Occupy was connected to burgeoning movements across the globe, and our current political horizons have been undoubtedly shaped by the movement's success at repositioning class and economic inequality within our political horizon. On the other hand, we saw' the rise of the Tea Party, a right-wing response to the crisis. While the Tea Party was critical of status-quo neoliberalism -- especially its cosmopolitanism and embrace of globalization and diversity, which was perfectly embodied by Obama's election and presidency -- it was not exactly anti-neoliberal. Rather, it was anti-left neoliberalism-, it represented a more authoritarian, right [wing] version of neoliberalism.

Within the context of the 2016 election, Clinton embodied the neoliberal center that could no longer hold. Inequality. Suffering. Collapsing infrastructures. Perpetual war. Anger. Disaffected consent. There were just too many fissures and fault lines in the glossy, cosmopolitan world of left neoliberalism and marketized equality. Indeed, while Clinton ran on status-quo stories of good governance and neoliberal feminism, confident that demographics and diversity would be enough to win the election, Trump effectively tapped into the unfolding conjunctural crisis by exacerbating the cracks in the system of marketized equality, channeling political anger into his celebrity brand that had been built on saying "f*** you" to the culture of left neoliberalism (corporate diversity, political correctness, etc.) In fact, much like Clinton's challenger in the Democratic primary, Benie Sanders, Trump was a crisis candidate.

Both Sanders and Trump were embedded in the emerging left and right responses to neoliberalism's crisis. Specifically, Sanders' energetic campaign -- which was undoubtedly enabled by the rise of the Occupy movement -- proposed a decidedly more "commongood" path. Higher wages for working people. Taxes on the rich, specifically the captains of the creditocracy.

Universal health care. Free higher education. Fair trade. The repeal of Citizens United. Trump offered a different response to the crisis. Like Sanders, he railed against global trade deals like NAFTA and the Trans-Pacific Partnership (TPP). However, Trump's victory was fueled by right neoliberalism's culture of cruelty. While Sanders tapped into and mobilized desires for a more egalitarian and democratic future, Trump's promise was nostalgic, making America "great again" -- putting the nation back on "top of the world," and implying a time when women were "in their place" as male property, and minorities and immigrants were controlled by the state.

Thus, what distinguished Trump's campaign from more traditional Republican campaigns was that it actively and explicitly pitted one group's equality (white men) against everyone else's (immigrants, women, Muslims, minorities, etc.). As Catherine Rottenberg suggests, Trump offered voters a choice between a multiracial society (where folks are increasingly disadvantaged and dispossessed) and white supremacy (where white people would be back on top). However, "[w]hat he neglected to state," Rottenberg writes,

is that neoliberalism flourishes in societies where the playing field is already stacked against various segments of society, and that it needs only a relatively small select group of capital-enhancing subjects, while everyone else is ultimately dispensable. 1

In other words, Trump supporters may not have explicitly voted for neoliberalism, but that's what they got. In fact, as Rottenberg argues, they got a version of right neoliberalism "on steroids" -- a mix of blatant plutocracy and authoritarianism that has many concerned about the rise of U.S. fascism.

We can't know what would have happened had Sanders run against Trump, but we can think seriously about Trump, right and left neoliberalism, and the crisis of neoliberal hegemony. In other words, we can think about where and how we go from here. As I suggested in the previous chapter, if we want to construct a new world, we are going to have to abandon the entangled politics of both right and left neoliberalism; we have to reject the hegemonic frontiers of both disposability and marketized equality. After all, as political philosopher Nancy Fraser argues, what was rejected in the election of 2016 was progressive, left neoliberalism.

While the rise of hyper-right neoliberalism is certainly nothing to celebrate, it does present an opportunity for breaking with neoliberal hegemony. We have to proceed, as Gary Younge reminds us, with the realization that people "have not rejected the chance of a better world. They have not yet been offered one."'

Mark Fisher, the author of Capitalist Realism, put it this way:

The long, dark night of the end of history has to be grasped as an enormous opportunity. The very oppressive pervasiveness of capitalist realism means that even glimmers of alternative political and economic possibilities can have a disproportionately great effect. The tiniest event can tear a hole in the grey curtain of reaction which has marked the horizons of possibility under capitalist realism. From a situation in which nothing can happen, suddenly anything is possible again.4

I think that, for the first time in the history of U.S. capitalism, the vast majority of people might sense the lie of liberal, capitalist democracy. They feel anxious, unfree, disaffected. Fantasies of the good life have been shattered beyond repair for most people. Trump and this hopefully brief triumph of right neoliberalism will soon lay this bare for everyone to see. Now, with Trump, it is absolutely clear: the rich rule the world; we are all disposable; this is no democracy. The question becomes: How will we show up for history? Will there be new stories, ideas, visions, and fantasies to attach to? How can we productively and meaningful intervene in the crisis of neoliberalism? How can we "tear a hole in the grey curtain" and open up better worlds? How can we put what we've learned to use and begin to imagine and build a world beyond living in competition? I hope our critical journey through the neoliberal conjuncture has enabled you to begin to answer these questions.

More specifically, in recent decades, especially since the end of the Cold War, our common-good sensibilities have been channeled into neoliberal platforms for social change and privatized action, funneling our political energies into brand culture and marketized struggles for equality (e.g., charter schools, NGOs and non-profits, neoliberal antiracism and feminism). As a result, despite our collective anger and disaffected consent, we find ourselves stuck in capitalist realism with no real alternative. Like the neoliberal care of the self, we are trapped in a privatized mode of politics that relies on cruel optimism; we are attached, it seems, to politics that inspire and motivate us to action, while keeping us living in competition.

To disrupt the game, we need to construct common political horizons against neoliberal hegemony. We need to use our common stories and common reason to build common movements against precarity -- for within neoliberalism, precarity is what ultimately has the potential to thread all of our lives together. Put differently, the ultimate fault line in the neoliberal conjiuicture is the way it subjects us all to precarity and the biopolitics of disposability, thereby creating conditions of possibility for new coalitions across race, gender, citizenship, sexuality, and class. Recognizing this potential for coalition in the face of precarization is the most pressing task facing those who are yearning for a new world. The question is: How do we get there? How do we realize these coalitional potentialities and materialize common horizons?

HOW WE GET THERE

Ultimately, mapping the neoliberal conjuncture through everyday life in enterprise culture has not only provided some direction in terms of what we need; it has also cultivated concrete and practical intellectual resources for political interv ention and social interconnection -- a critical toolbox for living in common. More specifically, this book has sought to provide resources for thinking and acting against the four Ds: resources for engaging in counter-conduct, modes of living that refuse, on one hand, to conduct one's life according to the norm of enterprise, and on the other, to relate to others through the norm of competition. Indeed, we need new ways of relating, interacting, and living as friends, lovers, workers, vulnerable bodies, and democratic people if we are to write new stories, invent new govemmentalities, and build coalitions for new worlds.

Against Disimagination: Educated Hope and Affirmative Speculation

We need to stop turning inward, retreating into ourselves, and taking personal responsibility for our lives (a task which is ultimately impossible). Enough with the disimagination machine! Let's start looking outward, not inward -- to the broader structures that undergird our lives. Of course, we need to take care of ourselves; we must survive. But I firmly believe that we can do this in ways both big and small, that transform neoliberal culture and its status-quo stories.

Here's the thing I tell my students all the time. You cannot escape neoliberalism. It is the air we breathe, the water in which we swim. No job, practice of social activism, program of self-care, or relationship will be totally free from neoliberal impingements and logics. There is no pure "outside" to get to or work from -- that's just the nature of the neoliberalism's totalizing cultural power. But let's not forget that neoliberalism's totalizing cultural power is also a source of weakness. Potential for resistance is everywhere, scattered throughout our everyday lives in enterprise culture. Our critical toolbox can help us identify these potentialities and navigate and engage our conjuncture in ways that tear open up those new worlds we desire.

In other words, our critical perspective can help us move through the world with what Henry Giroux calls educated hope. Educated hope means holding in tension the material realities of power and the contingency of history. This orientation of educated hope knows very well what we're up against. However, in the face of seemingly totalizing power, it also knows that neoliberalism can never become total because the future is open. Educated hope is what allows us to see the fault lines, fissures, and potentialities of the present and emboldens us to think and work from that sliver of social space where we do have political agency and freedom to construct a new world. Educated hope is what undoes the power of capitalist realism. It enables affirmative speculation (such as discussed in Chapter 5), which does not try to hold the future to neoliberal horizons (that's cruel optimism!), but instead to affirm our commonalities and the potentialities for the new worlds they signal. Affirmative speculation demands a different sort of risk calculation and management. It senses how little we have to lose and how much we have to gain from knocking the hustle of our lives.

Against De-democratization: Organizing and Collective Coverning

We can think of educated hope and affirmative speculation as practices of what Wendy Brown calls "bare democracy" -- the basic idea that ordinary' people like you and me should govern our lives in common, that we should critique and try to change our world, especially the exploitative and oppressive structures of power that maintain social hierarchies and diminish lives. Neoliberal culture works to stomp out capacities for bare democracy by transforming democratic desires and feelings into meritocratic desires and feelings. In neoliberal culture, utopian sensibilities are directed away from the promise of collective utopian sensibilities are directed away from the promise of collective governing to competing for equality.

We have to get back that democractic feeling! As Jeremy Gilbert taught us, disaffected consent is a post-democratic orientation. We don't like our world, but we don't think we can do anything about it. So, how do we get back that democratic feeling? How do we transform our disaffected consent into something new? As I suggested in the last chapter, we organize. Organizing is simply about people coming together around a common horizon and working collectively to materialize it. In this way, organizing is based on the idea of radical democracy, not liberal democracy. While the latter is based on formal and abstract rights guaranteed by the state, radical democracy insists that people should directly make the decisions that impact their lives, security, and well-being. Radical democracy is a practice of collective governing: it is about us hashing out, together in communities, what matters, and working in common to build a world based on these new sensibilities.

The work of organizing is messy, often unsatisfying, and sometimes even scary. Organizing based on affirmative speculation and coalition-building, furthermore, will have to be experimental and uncertain. As Lauren Berlant suggests, it means "embracing the discomfort of affective experience in a truly open social life that no

one has ever experienced." Organizing through and for the common "requires more adaptable infrastructures. Keep forcing the existing infrastructures to do what they don't know how to do. Make new ways to be local together, where local doesn't require a physical neighborhood." 5 What Berlant is saying is that the work of bare democracy requires unlearning, and detaching from, our current stories and infrastructures in order to see and make things work differently. Organizing for a new world is not easy -- and there are no guarantees -- but it is the only way out of capitalist realism.

Against Disposability: Radical Equality

Getting back democratic feeling will at once require and help us lo move beyond the biopolitics of disposability and entrenched systems of inequality. On one hand, organizing will never be enough if it is not animated by bare democracy, a sensibility that each of us is equally important when it comes to the project of determining our lives in common. Our bodies, our hurts, our dreams, and our desires matter regardless of our race, gender, sexuality, or citizenship, and regardless of how r much capital (economic, social, or cultural) we have. Simply put, in a radical democracy, no one is disposable. This bare-democratic sense of equality must be foundational to organizing and coalition-building. Otherwise, we will always and inevitably fall back into a world of inequality.

On the other hand, organizing and collective governing will deepen and enhance our sensibilities and capacities for radical equality. In this context, the kind of self-enclosed individualism that empowers and underwrites the biopolitics of disposability melts away, as we realize the interconnectedness of our lives and just how amazing it feels to

fail, we affirm our capacities for freedom, political intervention, social interconnection, and collective social doing.

Against Dispossession: Shared Security and Common Wealth

Thinking and acting against the biopolitics of disposability goes hand-in-hand with thinking and acting against dispossession. Ultimately, when we really understand and feel ourselves in relationships of interconnection with others, we want for them as we want for ourselves. Our lives and sensibilities of what is good and just are rooted in radical equality, not possessive or self-appreciating individualism. Because we desire social security and protection, we also know others desire and deserve the same.

However, to really think and act against dispossession means not only advocating for shared security and social protection, but also for a new society that is built on the egalitarian production and distribution of social wealth that we all produce. In this sense, we can take Marx's critique of capitalism -- that wealth is produced collectively but appropriated individually -- to heart. Capitalism was built on the idea that one class -- the owners of the means of production -- could exploit and profit from the collective labors of everyone else (those who do not own and thus have to work), albeit in very different ways depending on race, gender, or citizenship. This meant that, for workers of all stripes, their lives existed not for themselves, but for others (the appropriating class), and that regardless of what we own as consumers, we are not really free or equal in that bare-democratic sense of the word.

If we want to be really free, we need to construct new material and affective social infrastructures for our common wealth. In these new infrastructures, wealth must not be reduced to economic value; it must be rooted in social value. Here, the production of wealth does not exist as a separate sphere from the reproduction of our lives. In other words, new infrastructures, based on the idea of common wealth, will not be set up to exploit our labor, dispossess our communities, or to divide our lives. Rather, they will work to provide collective social resources and care so that we may all be free to pursue happiness, create beautiful and/or useful things, and to realize our potential within a social world of living in common. Crucially, to create the conditions for these new, democratic forms of freedom rooted in radical equality, we need to find ways to refuse and exit the financial networks of Empire and the dispossessions of creditocracy, building new systems that invite everyone to participate in the ongoing production of new worlds and the sharing of the wealth that we produce in common.

It's not up to me to tell you exactly where to look, but I assure you that potentialities for these new worlds are everywhere around you.

[Oct 08, 2017] On the history and grand duplicity of neoliberalism

Highly recommended!
Notable quotes:
"... Generally speaking, neoliberalism is a set of social, cultural, and political-economic forces that puts competition at the center of social life. According to neoliberalism, government's charge is not the care and security of citizens, but rather the promotion of market competition. In the neoliberal imagination, public social infrastructures (such as social security, unemployment benefits, public education) are believed to squash entrepreneurialism and individualism and breed dependency and bureaucracy. ..."
"... Gramsci's question is still pressing: How and why do ordinary working folks come to accept a system where wealth is produced by their collective labors and energies but appropriated individually by only a few at the top? The theory of hegemony suggests that the answer to this question is not simply a matter of direct exploitation and control by the capitalist class. Rather, hegemony posits that power is maintained through ongoing, ever-shifting cultural processes of winning the consent of the governed, that is, ordinary people like you and me. ..."
"... As Figure 1.1 shows, neoliberal hegemony works to erase this line between public and private and to create an entire society -- in fact, an entire world -- based on private, market competition. In this way, neoliberalism represents a radical reinvention of liberalism and thus of the horizons of hegemonic struggle. Crucially, within neoliberalism, the state's function does not go away; rather, it is deconstructed and reconstructed tow ard the new' end of expanding private markets. ..."
"... At this point, neoliberalism was still swimming upstream, as the postwar era ushered in a new' conjuncture that David Harvey calls embedded liberalism. ..."
"... Embedded liberalism was premised on a "class compromise" between the interests of workers and those of capitalists. In the name of peace, general prosperity, and global capitalism, a hegemonic consensus emerged "that the state should focus on full employment, economic growth, and the welfare of its citizens, and that state power should be freely deployed, alongside of or, if necessary, intervening in or even substituting for market processes to achieve these ends." 4 ..."
"... Neoliberalism developed largely as a coordinated political response to the hegemony of embedded liberalism. As Harvey explains, it was a project "to disembed capital from these constraints." 6 Indeed, the struggle for neoliberal hegemony waged a robust and successful class war on the "compromise" of embedded liberalism by developing, promoting, and implementing a new version of individual-liberty liberalism. ..."
"... As the system of embedded liberalism was taking root and establishing its dominance in national and international affairs, neoliberals were working on the ground: creating think tanks, forging political alliances, and infiltrating universities. During this second phase, neoliberalism emerged as a "thought collective": a "multilevel, multiphase, multi-sector approach to the building of political capacity to incubate, critique, and promulgate ideas." 7 ..."
"... The Neoliberal Thought Collective, as Philip Mirowski coined it, was a vertically integrated network of organizations and people focused on radically shifting the [concensus. ] ..."
Oct 08, 2017 | www.amazon.com

Quote from the book is courtesy of Amazon preview of the book Neoliberalism (Key Ideas in Media & Cultural Studies)

Generally speaking, neoliberalism is a set of social, cultural, and political-economic forces that puts competition at the center of social life. According to neoliberalism, government's charge is not the care and security of citizens, but rather the promotion of market competition. In the neoliberal imagination, public social infrastructures (such as social security, unemployment benefits, public education) are believed to squash entrepreneurialism and individualism and breed dependency and bureaucracy.

Competition, on the other hand, is heralded to ensure efficiency and incite creativity. Spurred by competition, individuals, organizations, companies, and even the government itself, will seek to optimize and innovate, creating a truly free social world where the best people and ideas come out on top. Put a little differently, neoliberalism aims to create a market-based society, where there are only competing private enterprises.

Since the late 1970s, neoliberal ideas have increasingly guided the policies and practices of governments and other social institutions, and as a result, we have come to live in competition with ourselves, others, and our social world.

...In a neoliberal society, the capitalist market is no longer imagined as a distinct arena where goods are valued and exchanged; rather, the market is, or ideally should be, the basis for all human activities.

...We are necessarily interdependent beings, vulnerable and connected to one another, as our lives are supported and made possible by a number of infrastructures (e.g., schools, roads and bridges, communication) that bring us into relation with one another.

We need each other. We need social cooperation and a commitment to a common, collective good if we are all going to make it in this world.

Neoliberalism and its diffusion of competition throughout society make the infrastructures that undergird our lives profoundly unstable, while simultaneously diminishing our senses of interdependence and social connection. As we will see, living in competition paradoxically undercuts what enables our lives -- that is, our social connections and infrastructures -- while telling us to assume more and more responsibility through self-enclosed individualism, thereby squashing our capacities for coming together, trusting and caring for each other, and organizing for social change.

... ... ...

In a culture composed ot anxious, sell-enclosed individuals, where market competition defines all of social life, we need now, more than ever, to see the social constructedness of our identities, worlds, and everyday lives. For neoliberalism's culture of living in competition is so entrenched that only a cultural studies perspective can produce the forms of knowledge we need to imagine and build new worlds. Indeed, a cultural studies perspective understands that possibilities of resistance and transformation are everywhere. As Grossberg puts it,

power is never able to totalize itself. There are always fissures and fault lines that may become the active sites of change. Power never quite accomplishes everything it might like to everywhere, and there is always the possibility of changing the structures and organization of power.7

See, here's the thing; there's a gigantic paradox at the heart of neoliberal culture. On one hand, as we will see, neoliberalism presents itself as a totalizing situation where resistance and transformation seem impossible, as living in competition has come to define all aspects of our lives. On the other hand, though, neoliberalism's power over our lives is incredibly tenuous; for, as mentioned earlier, I am convinced that most of us are yearning for a vastly different world, one that is built upon and nurtures our interdependencies and shared vulnerabilities, not self-enclosed individualism and living in competition.

... ... ...

1 should note that, within academia, neoliberalism is a controversial term. Scholars continue to debate its usefulness. On one hand, for some, neoliberalism is a buzzword, a catchphrase; it is a term that is so often repeated and invoked that it has lost its meaning. According to these critiques, neoliberalism is presented as a scary monster that is everywhere and nowhere all at once. It has come to figure as shorthand for everything that is evil in our world, and as a result, it ends up teaching us very little about what specifically is wrong, how exactly we got here, and what actually can be done to change course. Thus, many scholars advocate not using the term at all. On the other hand, other scholars prefer not to use the term because they argue that it is misleading. For them, neoliberalism is simply an advanced form of liberal capitalism. There's nothing really new or neo here, so why overstate and confuse things with the prefix?

However, despite these critiques, I hang onto the term neoliberalism. My wager in doing so is that writing this book as a critical study of neoliberal culture gives us a way to map our current conjuncture. It allows us to hold together the "specific ensemble of social, cultural, and economic forces" at work in our world and, thus, to locate our lives in interrelation with those of others. Indeed, I have found during my work with students over the years that studying neoliberalism enables us to see our interconnectedness and the new ways of living that sensing our interconnectedness opens up. We all suffer when we're forced to live in competition as self-enclosed individuals. Studying the neoliberal conjuncture allows us to clearly identify the roots of our suffering, and to tr ace our connections with others who are also suffering, although often in variegated ways. In other words, when w'e map our conjuncture, we can see how our different lives are lived on common ground, which is a crucial step to creating a world beyond competition.

... ... ...

A NEW HEGEMON

THE RISE OF NEOLIBERALISM

CHAPTER OVERVIEW

At this point, you might have a sense of what neoliberalism is, but you're probably still fuzzy on the details. This chapter starts to clear things up by charting the making of our neoliberal conjuncture. By tracing the history and development of neoliberalism, we will leant how competition came to be the driving force in our everyday lives. Specifically, we will examine the rise of neoliberal hegemony in four phases.

Table 1.1 Four Phases of Neoliberalism

As we will see, neoliberalism is far from natur and necessary; rather, it represents a clear political project that was organized, struggled for, and won.

A NEW HEGEMONY

We begin our investigation with a historical account of the rise of neoliberal hegemony. Hegemony is a concept developed by Italian Marxist Antonio Gramsci. Gramsci was keen to account for the definitive role that culture played in legitimizing and sustaining capitalism and its exploitation of the working classes. In our own context of extreme economic inequality, Gramsci's question is still pressing: How and why do ordinary working folks come to accept a system where wealth is produced by their collective labors and energies but appropriated individually by only a few at the top? The theory of hegemony suggests that the answer to this question is not simply a matter of direct exploitation and control by the capitalist class. Rather, hegemony posits that power is maintained through ongoing, ever-shifting cultural processes of winning the consent of the governed, that is, ordinary people like you and me.

In other words, if we want to really understand why and how phenomena like inequality and exploitation exist, we have to attend to the particular, contingent, and often contradictory ways in which culture gets mobilized to forward the interests and power of the ruling classes. According to Gramsci, there was not one ruling class, but rather a historical bloc, "a moving equilibrium" of class interests and values. Hegemony names a cultural struggle for moral, social, economic, and political leadership; in this struggle, a field -- or assemblage -- of practices, discourses, values, and beliefs come to be dominant. While this field is powerful and firmly entrenched, it is also open to contestation. In other words, hegemonic power is always on the move; it has to keep winning our consent to survive, and sometimes it fails to do so.

Through the lens of hegemony, we can think about the rise of neoliberalism as an ongoing political project -- and class struggle -- to shift society's political equilibrium and create a new dominant field. Specifically, we are going to trace the shift from liberal to neoliberal hegemony. This shift is represented in the two images below.

Previous versions of liberal hegemony imagined society to be divided into distinct public and private spheres. The public sphere was the purview of the state, and its role was to ensure the formal rights and freedoms of citizens through the rule of law. The private sphere included the economy and the domestic sphere of home and family.

For the most part, liberal hegemony was animated by a commitment to limited government, as the goal was to allow for as much freedom in trade, associations, and civil society as possible, while preserving social order and individual rights. Politics took shape largely around the line between public and private; more precisely, it was a struggle over where and how to draw the line. In other words, within the field of liberal hegemony, politics was a question of how to define the uses and limits of the state and its public function in a capitalist society. Of course, political parties often disagreed passionately about where and how to draw that line. As we'll see below, many advocated for laissez-faire capitalism, while others argued for a greater public role in ensuring the health, happiness, and rights of citizens. What's crucial though is that everyone agreed that there was a line to be drawn, and that there was a public function for the state.

As Figure 1.1 shows, neoliberal hegemony works to erase this line between public and private and to create an entire society -- in fact, an entire world -- based on private, market competition. In this way, neoliberalism represents a radical reinvention of liberalism and thus of the horizons of hegemonic struggle. Crucially, within neoliberalism, the state's function does not go away; rather, it is deconstructed and reconstructed tow ard the new' end of expanding private markets.

Consequently, contemporary politics take shape around questions of how best to promote competition. For the most part, politics on both the left and right have been subsumed by neoliberal hegemony. For example, while neoliberalism made its debut in Western politics with the right-wing administrations of Ronald Reagan and Margaret Thatcher, leaders associated with the left have worked to further neoliberal hegemony in stunning ways. As we will explore in more depth below and in die coming chapters, both U.S. presidents Bill Clinton and Barack Obama have governed to create a privatized, market society. In other words, there is both a left and a right hegemonic horizon of neoliberalism. Thus, moving beyond neoliberalism will ultimately require a whole new field of politics.

It is important to see that the gradual shift from liberal to neoliberal hegemony was not inevitable or natural, nor was it easy. Rather, what we now r call neoliberalism is the effect of a sustained hegemonic struggle over the course of the twentieth and twentyfirst centuries to construct and maintain a new political equilibrium. Simply put, neoliberalism was, and continues to be, struggled over, fought for, and w'on.

In Masters of the Universe: Hayek, Friedman, and the Birth of Neoliheral Politics, Daniel Stedman Jones charts the history of the neoliberal project in three phases. The first phase saw the development of neoliberal ideas and philosophies in Europe during the years between World War I and World War II, as a relatively small group of economists (including most notably those from Austria, Germany, and France), wrestling with the rise of fascism, communism, and socialism, sought to envision a new liberal society that would protect individual liberties and free markets. The second phase w as a period of institution building, knowledge production, and organizing that enabled neoliberalism to cultivate a powerful base in culture and politics, especially in the U.S. and United Kingdom. During this phase, neoliberalism developed into a "thought collective" and full-fledged political movement. In the third phase, neoliberal ideas migrated from the margins to the center of political life as they came to shape global trade and development suggested by the theory of hegemony, none of these phases were neat and clean; each was shot through with struggle and contingency.

1 am adding a fourth phase, which is the focus of this book. Here neoliberalism is not only a set of economic policies and political discourses, but also a deeply entrenched sensibility of w ho we are and can become and of what is possible to do, both individually and collectively. It is what Raymond Williams called "a structure of feeling." Thanks to a convergence of different social, economic, and cultural forces, which we will explore throughout the following chapters, competition has become fully embedded in our lifeworlds: it is our culture, our conjuncture, the air we breathe. More specifically, this fourth phase is characterized by widespread precarity, where crisis becomes ordinary, a constant feature of everyday life. As we will learn in coming chapters, we are prompted to confront the precarity neoliberalism brings to our lives with more neoliberalism, that is, with living in competition and self-enclosed individualism.

PHASE I: THEORETICAL INNOVATION

The Crisis of Liberalism and the Birth of the Social Welfare State

Neoliberalism emerged out of the crisis of liberalism that ultimately came to a head in the early twentieth century. It is crucial to understand that liberal hegemony was never a coherent, unified phenomenon. Rather, it developed around a central political antagonism. On one side were those who championed individual liberty (especially private property rights and free markets) above all else. They argued against government intervention in private life, especially in the market. On the other side, social reformers believed that government should be pursued for the common good and not just for individual liberties. In the decades leading up to the Great Depression, it became clear that the individual-liberty side, which had long been dominant, was inadequate for managing huge transformations in capitalism that were underway. These transformations included industrialization, urbanization, and internationalization, as well as the rise of large-scale corporate firms that squeezed smaller market actors. Huge gaps formed between the political-economic elite, the middle classes, and the poor. Simply put, liberalism was in crisis.

During this time of social, cultural, and economic upheaval, those espousing the common good gained political ground. Specifically, the misery and devastation of the Great Depression solidified the gains for social reformers, opening a new era where a new, common-good liberalism began to prevail. In the United States, President Franklin

Roosevelt's administration passed a comprehensive set of social policies designed to protect individuals from the unpredictable and often brutal operations of capitalism. These included the following:

  1. Reforming banking: The Glass-Steagall Act of 1933 set up regulatory agencies to provide oversight to the stock markets and financial sector, while enforcing the separation of commercial banking and speculative investment. Simply put, banks couldn't gamble with your savings and future.
  2. Strengthening labor: In 1935, the National Recovery Administration and the National Labor Relations Act were passed to recognize labor unions and the rights of workers to organize. At the same time, the administration spurred employment through the Public Works Administration, the Civil Works Administration, and the Works Progress Administration, while guaranteeing workers a dignified retirement with the Social Security Act of 1935.
  3. Promoting housing: A range of programs, policies, and agencies were established, including the Federal Housing Administration and the U.S. Housing Authority, to encourage homeownership and provide housing to the poor and homeless. 1

Taken together, these policies marked the birth of the so-called social welfare state, albeit one that was limited in scope and often highly exclusionary in practice. For example, a universal health care program was never realized. Many social groups, including African-Americans, migrant farm workers, and women, were prohibited by law from receiving federal benefits such as social security or unemployment. 3 Additionally, institutional racism plagued (as it still does) housing and banking institutions.

The Walter Lippmann Colloquium and the Birth of Neoliberalism

It is helpful to trace the emergence of our neoliberal conjuncture back to this moment where the common good was starting to win the day via the establishment of a limited and exclusionary social welfare state. For, despite the fact that these social welfare policies effectively "saved" capitalism from destroying itself, the individual-liberty side was deeply troubled. They feared that a new and established the Mont Pelerin Society (MPS) in 1947 to continue the work of dreaming up a new individual-liberty liberalism.

At this point, neoliberalism was still swimming upstream, as the postwar era ushered in a new' conjuncture that David Harvey calls embedded liberalism.

Embedded liberalism was premised on a "class compromise" between the interests of workers and those of capitalists. In the name of peace, general prosperity, and global capitalism, a hegemonic consensus emerged "that the state should focus on full employment, economic growth, and the welfare of its citizens, and that state power should be freely deployed, alongside of or, if necessary, intervening in or even substituting for market processes to achieve these ends." 4

A central piece of the embedded liberal compromise was the Bretton Woods Accord, which attempted to stabilize the global economy by re-fixing currency rates to the gold standard. The idea was that national economies shouldn't be threatened by currency speculation in the financial markets. All this meant that an infrastructure emerged to protect citizens' economic and social security. To ensure the common good, capitalism must be embedded within "a web of social and political constraints." 5

Neoliberalism developed largely as a coordinated political response to the hegemony of embedded liberalism. As Harvey explains, it was a project "to disembed capital from these constraints." 6 Indeed, the struggle for neoliberal hegemony waged a robust and successful class war on the "compromise" of embedded liberalism by developing, promoting, and implementing a new version of individual-liberty liberalism.

The Neoliberal Thought Collective

As the system of embedded liberalism was taking root and establishing its dominance in national and international affairs, neoliberals were working on the ground: creating think tanks, forging political alliances, and infiltrating universities. During this second phase, neoliberalism emerged as a "thought collective": a "multilevel, multiphase, multi-sector approach to the building of political capacity to incubate, critique, and promulgate ideas." 7

The Neoliberal Thought Collective, as Philip Mirowski coined it, was a vertically integrated network of organizations and people focused on radically shifting the [concensus. ]

[Oct 07, 2017] Finances hold on our everyday life must be broken by Costas Lapavitsas

Highly recommended!
Yves Smith's ebook is available free here. It covers the same set of topics and is useful add on to Costas Lapavitsas book.
Notable quotes:
"... Financialisation represents a historic and deep-seated transformation of mature capitalism. Big businesses have become "financialised" as they have ample profits to finance investment, rely less on banks for loans and play financial games with available funds. Big banks, in turn, have become more distant from big businesses, turning to profits from trading in open financial markets and from lending to households. Households have become "financialised" too, as public provision in housing, education, health, pensions and other vital areas has been partly replaced by private provision, access to which is mediated by the financial system. Not surprisingly, households have accumulated a tremendous volume of financial assets and liabilities over the past four decades. ..."
"... Financialisation has also created new forms of profit associated with financial markets and transactions. Financial profit can be made out of any income, or any sum of money that comes into contact with the financial sphere. Households, for example, generate profits for finance as debtors (mostly by paying interest on mortgages) but also as creditors (mostly by paying fees and charges on pension funds and insurance). Finance is not particular about how and where it makes its profits, and certainly does not limit itself to the sphere of production. It ranges far and wide, transforming every aspect of social life into a profit-making opportunity. ..."
"... Financialised capitalism is, thus, a deeply unequal system, prone to bubbles and crises – none greater than that of 2007-09. What can be done about it? The most important point in this respect is that financialisation does not represent an advance for humanity, and very little of it ought to be preserved. Financial markets are, for instance, able to mobilise advanced technology employing some of the best-trained physicists in the world to rebalance prices across the globe in milliseconds. This "progress" allows financiers to earn vast profits; but where is the commensurate benefit to society from committing such expensive resources to these tasks? ..."
"... The debate should focus on why neoliberalism was seen as the panacea to the relatively socialist post-War consensus. Neoliberalism is an ideology which has not even begun to be deconstructed. Like religion, the myths (concerning deficits and debt, for example) have been exposed here in CiF but not the global public -- and must be eventually. ..."
"... Big Brother=Neoliberalism=The Market=The Party=Enforcement ..."
"... Don't delude yourself. A capitalist "society" must have control over its citizens as intensive as a socialist one - just look at GCHQ/NSA. That it is exercised through markets and advertising instead of propaganda is neither here nor there. ..."
"... Thatcher's and Reagan's vicious, vile strikebreaking and the support they got from the supposedly free press and supposedly impartial judiciary in that is a good example. ..."
"... "The right way to think about it is that the financial industry must be doing something incredibly useful or it would not exist." What a ridiculous thing to say. By the same reasoning both bubonic plague and child abusers are both doing something incredibly useful, otherwise they would not exist. ..."
"... Classical economics generally sees things the way you do, and attempts to match up economics with reality. Neoclassical economics on the other hand, which is the system we're currently using, has little concern with reality. So the specific problem involves our economic system diverging from reality. ..."
"... Compounding factors involve the sociopathic nature of the individuals involved. For example, we think nothing about starting a war (generating profit for our military machine), then rebuilding the ravaged country (generating profit for our construction companies). In neoclassical economics that's just damned good business (the banks and corporations taking profits, the taxpayer footing the bill). ..."
"... There have always been alpha males and alpha females even, people who are very competitive, workaholics, who are leaders, who must be in charge. ..."
"... I think the difference in the last 30 years was Thatcherism and in very short order Reaganism. Adam Curtis says that Thatcher and her campaign manager were ardent anti-communists, they saw Britain in the grip of the unions as a kind of moral decay rotting the nation from the inside out (the enemy within) and they were both obsessed with Churchill, so they embarked on a Methodist 'the devil makes work for idle hands' market philosophy aimed at encouraging people to be self-sufficient, independent, have Victorian values, be as successful as possible and all that stuff. ..."
"... I think another thing is that capitalism then was still in its infancy of the turbo-on-steroids stage. For that cancer to truly metastasize we needed the personal computer network revolution that enabled globalisation, ..."
"... I agree that financialisation is a parasitic activity that will bring the body politic to its knees - and in the not too near future. This is capitalism that really doesn't give f**k about the environment or anyone who is not earning these obscene bucks shuffling electronic wizardry around to nobody's benefit but their own. ..."
"... Whose value system is overly competitive with the desire to win.. How can it be otherwise when we, ourselves, have brainwashed the children since the 1980s. We have given them Gameboys, Xboxes and the WoW where the emphasis is on winning. Play this for hours every day and the message becomes ingrained -- WIN ..."
"... The USSR had to be heavily militarized because its very existence depended on being able to defend itself against the aggressive USA and its little helpers, Nato-countries. It was surrounded by US military bases. That is the same US that went and murdered millions in SE Asia to "fight Communism". ..."
"... The article is about a global issue, not only your backyard. The people of UK can consider themselves lucky compared with billions of others. But what would you care. ..."
"... The financial sector, CEOs, oligarchs etc run on good old fashioned greed - a commodity not about to run out anytime soon. Is it even 'reversible' ? ..."
Jan 01, 2014 | www.theguardian.com

Finance's hold on our everyday life must be broken The rampant capitalism that has brought the market into every corner of society needs to be reined in 'Financial calculation evaluates everything in pennies and pounds, transforming the most basic goods – above all, housing – into "investments".'

The rampant capitalism that has brought the market into every corner of society needs to be reined in

The mature economies of the modern world, particularly the United States and Britain, are often described as "financialised". The term reflects the ascendancy of the financial sector. Even more important, it conveys the penetration of the financial system into every nook and cranny of society, including housing, education, health and other areas of life that were previously relatively immune.

Evidence that financialisation represents a deep transformation of mature economies is offered by the global crisis of 2007-09 . The crisis originated in the elephantine US financial system, and was associated with speculation in housing. For a brief period it led to serious questioning of mainstream economic theory and policy: how to confront the turmoil, and what to do about the diseased financial system; are new economic theories needed? However, after six years it is clear that very little has changed. Financialisation is here to stay.

Consider, for instance, the policies to confront the crisis. First, public funds were injected into banks to boost capital. Second, public liquidity was made available to banks to sustain their operations. Third, public interest rates were driven to zero to enable banks to make secure profits by lending to their own customers at higher rates.

This extraordinary public largesse towards private banks was matched by austerity and wage reductions for workers and households. As for restructuring finance, nothing fundamental has taken place. The behemoths that continue to dominate the global financial system operate in the knowledge that they enjoy an unspoken public guarantee. The unpalatable reality is that financialisation will persist, despite its costs for society.

Financialisation represents a historic and deep-seated transformation of mature capitalism. Big businesses have become "financialised" as they have ample profits to finance investment, rely less on banks for loans and play financial games with available funds. Big banks, in turn, have become more distant from big businesses, turning to profits from trading in open financial markets and from lending to households. Households have become "financialised" too, as public provision in housing, education, health, pensions and other vital areas has been partly replaced by private provision, access to which is mediated by the financial system. Not surprisingly, households have accumulated a tremendous volume of financial assets and liabilities over the past four decades.

The penetration of finance into the everyday life of households has not only created a range of dependencies on financial services, but also changed the outlook, mentality and even morality of daily life. Financial calculation evaluates everything in pennies and pounds, transforming the most basic goods – above all, housing – into "investments". Its logic has affected even the young, who have traditionally been idealistic and scornful of pecuniary calculation. Fertile ground has been created for neoliberal ideology to preach the putative merits of the market.

Financialisation has also created new forms of profit associated with financial markets and transactions. Financial profit can be made out of any income, or any sum of money that comes into contact with the financial sphere. Households, for example, generate profits for finance as debtors (mostly by paying interest on mortgages) but also as creditors (mostly by paying fees and charges on pension funds and insurance). Finance is not particular about how and where it makes its profits, and certainly does not limit itself to the sphere of production. It ranges far and wide, transforming every aspect of social life into a profit-making opportunity.

The traditional image of the person earning financial profits is the "rentier", the individual who invests funds in secure financial assets. In the contemporary financialised universe, however, those who earn vast returns are very different. They are often located within a financial institution, presumably work to provide financial services, and receive vast sums in the form of wages, or more often bonuses. Modern financial elites are prominent at the top of the income distribution, set trends in conspicuous consumption, shape the expensive end of the housing market, and transform the core of urban centres according to their own tastes.

Financialised capitalism is, thus, a deeply unequal system, prone to bubbles and crises – none greater than that of 2007-09. What can be done about it? The most important point in this respect is that financialisation does not represent an advance for humanity, and very little of it ought to be preserved. Financial markets are, for instance, able to mobilise advanced technology employing some of the best-trained physicists in the world to rebalance prices across the globe in milliseconds. This "progress" allows financiers to earn vast profits; but where is the commensurate benefit to society from committing such expensive resources to these tasks?

Financialisation ought to be reversed. Yet such an entrenched system will never be reversed by regulation alone. Its reversal also requires the creation of public banking that would operate with a new spirit of public service. It also needs effective controls to be applied to private banking as well as to international flows of capital. Not least, it requires new methods of meeting the financial requirements of households, as well as of small and medium enterprises. There is an urgent need for communal and associational ways to provide housing, education, health and other basic goods and services for working people, breaking the hold of finance on everyday life.

Ultimately, financialisation will not be reversed without an ambitious programme to re-establish the superiority of the social over the private, and the collective over the individual in contemporary society. Reversing financialisation is about reining in the rampant capitalism of our day.

Costas Lapavitsas's latest book is Profiting Without Producing: How Finance Exploits Us All

ATrueFinn -> Mizzentop , 3 Jan 2014 08:11

The Berlin Wall kept people in - that was its primary purpose.

Few people know what the Berlin Wall was. It was a wall around West Berlin, which was not a part of West Germany but an occupied territory within the GDR. An American president called himself a Berliner, which means a Berliner Pfannkuchen, i.e. a doughnut (technically, not by shape and content.)

But whatever. The good people of the UK nowadays seem to wish there was a Rumanian Wall and a Bulgarian Wall to keep people in. I gather quite a few in the former West Germany would like a wall to keep the Ossies in.

HolyInsurgent -> AhBrightWings , 2 Jan 2014 22:51

Why Reagan and Thatcher were allowed to gut functioning...societies so that a handful could prosper remains the great mystery.

On the contrary. Reagan and Thatcher were convenient advocates of a growing conservative consensus. The convergence of institutions must have begun before their tenure because neoliberalism became the dominant consensus by the time of their leadership.

The debate should focus on why neoliberalism was seen as the panacea to the relatively socialist post-War consensus. Neoliberalism is an ideology which has not even begun to be deconstructed. Like religion, the myths (concerning deficits and debt, for example) have been exposed here in CiF but not the global public -- and must be eventually.

Big Brother=Neoliberalism=The Market=The Party=Enforcement

Gegenbeispiel -> Mizzentop , 2 Jan 2014 17:19

Don't delude yourself. A capitalist "society" must have control over its citizens as intensive as a socialist one - just look at GCHQ/NSA. That it is exercised through markets and advertising instead of propaganda is neither here nor there.

Thatcher's and Reagan's vicious, vile strikebreaking and the support they got from the supposedly free press and supposedly impartial judiciary in that is a good example.

Mowglia -> JohnJohnJohnJohn , 2 Jan 2014 15:49

"The right way to think about it is that the financial industry must be doing something incredibly useful or it would not exist." What a ridiculous thing to say. By the same reasoning both bubonic plague and child abusers are both doing something incredibly useful, otherwise they would not exist.

Perhaps you could explain to me what exactly it is that these socialists are doing that is so useful?

Mowglia -> londongapp , 2 Jan 2014 15:40

It is the essential difference between wealth and money that is constantly missed by Politicians and Economists.

Classical economics generally sees things the way you do, and attempts to match up economics with reality. Neoclassical economics on the other hand, which is the system we're currently using, has little concern with reality. So the specific problem involves our economic system diverging from reality.

Compounding factors involve the sociopathic nature of the individuals involved. For example, we think nothing about starting a war (generating profit for our military machine), then rebuilding the ravaged country (generating profit for our construction companies). In neoclassical economics that's just damned good business (the banks and corporations taking profits, the taxpayer footing the bill).

Mowglia -> Claire Bouskill , 2 Jan 2014 15:25

isnt it amazing that Marx predicted over 150 years ago that the greedy capitalists would be their own gravediggers

I never read Marx, although it sounds like he knew a bit about human nature and simply took the system to its logical conclusion. I'm not anti-capitalism. I believe it was a useful development in human history, similar to religion and feudalism. But now it's time to say goodbye and find a new way of doing things. There's no point in flogging a dead horse, unless you're part of the 1%.
MereMortal -> ScroogeJr , 2 Jan 2014 14:47
I haven't really given that aspect of it much thought. When I was growing up, we played Monopoly or Risk or Cluedo, we went outside, we raced, played cowboys and indians and the rest.

There have always been alpha males and alpha females even, people who are very competitive, workaholics, who are leaders, who must be in charge.

I think the difference in the last 30 years was Thatcherism and in very short order Reaganism. Adam Curtis says that Thatcher and her campaign manager were ardent anti-communists, they saw Britain in the grip of the unions as a kind of moral decay rotting the nation from the inside out (the enemy within) and they were both obsessed with Churchill, so they embarked on a Methodist 'the devil makes work for idle hands' market philosophy aimed at encouraging people to be self-sufficient, independent, have Victorian values, be as successful as possible and all that stuff.

I can well believe that, it's just that they stirred up the whole thing without ever thinking through the terrible potential downsides. That's a major problem with politics, fanatical zealots who claim to have the solution for all the problems a nation faces.

I think another thing is that capitalism then was still in its infancy of the turbo-on-steroids stage. For that cancer to truly metastasize we needed the personal computer network revolution that enabled globalisation, partly because then, it was possible for people to source more and more and more income streams without the commensurate ability to truly monitor the quality of the investments or to manage the human relations that actually motivate people to feel appreciated and to do good work.

That's my sixpence worth anyway.

zavaell , 2 Jan 2014 14:34
Fighting talk. I agree that financialisation is a parasitic activity that will bring the body politic to its knees - and in the not too near future. This is capitalism that really doesn't give f**k about the environment or anyone who is not earning these obscene bucks shuffling electronic wizardry around to nobody's benefit but their own.

Maybe regulation per se is not the main answer, but it sure as hell needs a politician to stand up and say what is said in this article.

ScroogeJr -> MereMortal , 2 Jan 2014 12:46
Whose value system is overly competitive with the desire to win.. How can it be otherwise when we, ourselves, have brainwashed the children since the 1980s. We have given them Gameboys, Xboxes and the WoW where the emphasis is on winning. Play this for hours every day and the message becomes ingrained -- WIN
ATrueFinn -> Mizzentop , 2 Jan 2014 09:37

The failure of the USSR owed much to its militarism but don't you see that a society like that HAS to be heavily militarized because its very existence depends on having total control over its citizens.

The USSR had to be heavily militarized because its very existence depended on being able to defend itself against the aggressive USA and its little helpers, Nato-countries. It was surrounded by US military bases. That is the same US that went and murdered millions in SE Asia to "fight Communism".

TwoWolvesAndALamb , 2 Jan 2014 08:48
You are spot on with this:

Consider, for instance, the policies to confront the crisis. First, public funds were injected into banks to boost capital. Second, public liquidity was made available to banks to sustain their operations. Third, public interest rates were driven to zero to enable banks to make secure profits by lending to their own customers at higher rates.

Yet it seems you still blame the private sector for accepting the favorable situation rather than the state for causing it:

Ultimately, financialization will not be reversed without an ambitious program to re-establish the superiority of the social over the private, and the collective over the individual in contemporary society.

A shift towards the rights of the individual would see the state have less power to bail out the banks. Your solution is to give the source of the problem yet more power. The banks couldn't bail themselves out - they needed the state to take the funds from the citizens. Why do you find the state so blameless as to suggest they need more influence?

theonionmurders -> selfraisingfred , 2 Jan 2014 08:40

Remind me, because maybe I missed something, but which bit of the post-war German economic miracle had them seeking a bailout from the IMF?

I'll tell you. West Germany was allowed to default twice on massive post-war loans in 1946 and 1948 thereby requiring IMF loans to finance it's day-to-day running.

TheGreenLion -> Tenthred , 2 Jan 2014 08:40
My current company needs debt to pay for the machinery and running costs to create products. These are sold for profit and the debt repaid. Without the initial debt the products, the salaries, the taxable income would not exist. Debt is banned in Islamic countries – it is not a coincidence that from being streets behind 1000 years ago, the Western world is now considerably more developed
theonionmurders -> Trilbey , 2 Jan 2014 08:23
Yves Smith's ebook is available free here.
harlequinmod -> JohnJohnJohnJohn , 2 Jan 2014 08:09
I think what sticks in the craw of socialists is that these financial corporations and people working in finance would be out of work if it hadn't been for Government intervention and taxpayer money. There is a real irony in having had to listen how great Thatcher was for breaking the unions, smashing nationalized industries on the basis of free market principles only to have to bail out the biggest advocates of the free market. Especially when the cause of the longest and deepest recession in memory was caused by those financial corporations and people working in finance.

Do I envy these people? Not really, they are on the whole treated like sh1t and they are so attached to their money that they are like mewling, whimpering children when faced with the threat of losing their jobs.

Claire Bouskill -> Mowglia , 2 Jan 2014 07:16
Isn't it amazing that marx predicted over 150 years ago that the greedy capitalists would be their own gravediggers as they continue to pauperize the workers to extract more profit , drive down wages and replace jobs with machinery. Forgetting it is the workers who buy the commodities and if they cannot buy , the system will collapse in on itself
QueenBoadicea -> Tenthred , 2 Jan 2014 07:13
So will the likes of Wonga and other payday lenders should be closed down and the directors face court proceedings for usury?

This is an interesting article: http://unemploymentmovement.com/forum/chat-a-rap/5926-welcome-to-the-usury-kingdom

But seeing as the Anglican church has shares in Wonga, this made me wake up to the hypocrisy of the church http://cesc.net/scholarweb/swabey/swabey.pdf

Mizzentop -> Gegenbeispiel , 2 Jan 2014 06:28
Your problem is that that you may desire a non-aspirational society, but that's just not how people are. The human spirit is aspirational and competitive - whether you think that's desirable or not doesn't matter. Consequently, the type of society you want is only possible if that human spirit can be quashed and contained.

The failure of the USSR owed much to its militarism but don't you see that a society like that HAS to be heavily militarised because its very existence depends on having total control over its citizens. Without guns and walls, people would have just refused to be cowed and would have left.

In simple terms, human beings are imperfect individuals driven by passions, ambitions and desires which result in bad things happening but more often good things. Whether we like the fact that we are imperfect is immaterial - we are what we are and no enforced system which seeks to contain our individuality will ever succeed in the long run.

Yossarian247 -> Hikeybikeychick , 2 Jan 2014 05:47
As bullydoggy says - its land (and I would add debt too).

This Nationwide graph shows price rising 2.7 times adjusted for inflation from q3 1983 – q3 2007. This is 6.5 times in nominal terms.

Residential Land Prices
- Looking at figures for South East England from the same period aug 1983-july 07, it increases further, 13 times nominally - and this was an area with the 3rd lowest increase in nominal terms! (At the bottom of the page - 'download the full residential land value data')

The excellent film RealEstate4Ransom may help explain things, or the transcript may be quicker.

Also a less mentioned part of the increase in 'value' is as Positive Money point out the amount of debt created to purchase one.

succulentpork -> Febo , 2 Jan 2014 05:45
There is no reason that interest can't be paid from the existing stock of money. Play a game of monopoly and you will see that it is possible. Your argument has a false composition within it. The central bank is an arm of the government to all intents and purposes. To consider it as a case of the private sector holding the government over a barrel is silly. The state is the one with a monopoly over money.
Artusov , 2 Jan 2014 05:25
It's fairly simple. Split Banking into ' High Street ' stuff [ as in the good old days ] and the newer riskier stuff . You could even have a State Bank. If an investment company goes bust - let them - no bail outs - no public money. is lost. Have people who know what they are doing in the Treasury and FSA - This hasn't happened so far.

Have a sensible rate of higher tax , get them to spend it here and /or tax luxury goods at higher rates. Rich people like to spend money - encourage it. Encourage philanthropy, endowments to Universities etc.

EllisWyatt -> ATrueFinn , 2 Jan 2014 05:16

Communism has not been tried anywhere, so you don't know whether it works or not. Neoliberalism has now been tried quite enough for us to know that it does not

No what you call neoliberalism might have been tried but not true neoliberalism, that will work brilliantly, all you need to do is give me the reigns of power and let me get on with it, trust me...

Not convinced? about as convincing as your claim that communism has not been properly tried so maybe we should give it a go?

Artusov -> botany , 2 Jan 2014 04:22
' Tobin tax on financial transactions can be of help. '

Unless universally applied [ AND done properly ] this would be an extremely STUPID idea. Do you think for one moment that Wall Street [ or even, say, Moscow ] would ever do this ? The following points should be noted :-

1. Tried in Sweden - didn't work and abandoned

2. 70 % would come from the City - to disappear into the EU coffers never to be seen again apart from extra lunch portions for Van Rumpy Pumpy and his unelected catamites

3. A perfectly respectable international business may need to transfer collateral [ security ] from one subsidiary to another every day [ to cope with different trading zones ]. This sort of transaction happens hundreds of thousands of time a day in the City - twice a day at 0.1 % over 250 trading days for a £ 1 million, say, is a huge amount of money.

So what will happen ? - the tax will either get handed on to the customer [ which may well be a pensioner's or worker's Pension Fund ]

OR gets done in a more expensive way [ again , cost handed on to customer ]

OR Firm decamps elsewhere

IE - NO-ONE BENEFITS

The armchair anarchists and toy-town Trots may jump and down with glee but the City provides a significant chunk of GDP - If you want to be Greece but without the sunshine or being bailed out by the the Germans then so be it.

Febo -> succulentpork , 2 Jan 2014 04:18

If I understand you correctly, I think you are suggesting that to pay interest more money must be created as debt. I've seen this suggested quite often but I think it is a fallacy of composition.

If you were to think about money as a fixed quantity of gold you could pose the same question, how could interest be paid out on the gold in more gold? Quite easily, some of the gold just gets called interest payments as it changes hands, and that's it. No new gold is required.

Under a gold standard interest is paid by the "natural" growth in the money supply resulting from gold mining.
Under a fiat system the only way the intest could be paid would be if non-debt based money were issued which would require monetary reform. Yes, that's right, under our system the govt cannot issue money - it must borrow it from the central bank, which, in the case of the USA, is a group of private banks.

wh1952 -> ATrueFinn , 2 Jan 2014 04:17

The article is about a global issue, not only your backyard. The people of UK can consider themselves lucky compared with billions of others. But what would you care.

Quite. But do you think any one of the "socialists" raging on about nasty neo-liberals and capitalists have twigged that if a fairer system was applied that few in the UK would see any increase in their standard of living?

Freeport -> Mowglia , 2 Jan 2014 04:10

Sure thing mate, it'd be my pleasure! Are you REALLY sure you want to take the risk though?

It would mean you suddenly accumulate a rather large debt...

Nope the debts yours. I just want the cash, and money is bad. Apparently.

Of course we could... financialise the debt. You could roll the debt up and and sell it to people based on whether or not they think you'll pay it. Oh hang on... we've just killed the article because that's bad too.

Freeport -> someoneionceknew , 2 Jan 2014 04:08

It is a transfer.

No. Its an exchange. Each side gets something. Lets take a simple example. I buy a cake at a bakery. I get a cake, in exchange for money. The baker gets money for the cake. The baker (not being a moron) knows how much the ingredients, energy, time and so on the cake has cost. Some of that money goes to pay for these bits of the cake. The remainder is profit. The baker, in turn pays the suppliers. They also know what it cost to get their supplies ready for the baker, and add a little bit more for profit. So... show me the transfer, rather than the exchange.

Profit is income less spending. Somebody else's spending is your income.

Yes. Well done.

ATrueFinn -> Jonesey505 , 2 Jan 2014 03:49

Neither communism or crony capitalism work, so why not a free market system

Communism has not been tried anywhere, so you don't know whether it works or not. Neoliberalism has now been tried quite enough for us to know that it does not. Free market inevitably leads to neoliberalism, otherwise it is not free.

CaptCrash -> bilejones , 2 Jan 2014 03:44
That's right blame the only body which is accountable to you, and can be controlled by you, if only you'd get off your arse
frontalcortexes -> Denny O'Connor , 2 Jan 2014 03:43
It is always amusing to watch the rantings of someone living in the safest, most prosperous, more socially equal, society in the history of man ranting and raving for Communism or a Benevolent Dictator, or something; anything but this.

Were it in my power I would cheerfully transport you to the 12th Century where you could enjoy the benefits of living (shortly) free of Financialism.

Why not make it the 4th century and the collapse of the Western Roman Empire through excessive debt servitude? Or indeed fast forward into the 21st century with the decline of Western capitalist economies for the same reason and the undesirable triumph of Chinese Communist market capitalism through its use of Abba Lerner's Functional Finance?

Tenthred -> grauniadreader101 , 2 Jan 2014 03:40
"I think Christ's attack on the money lenders (which may have been a big part of what cost him his life) and the Islamic prohibition of usury falls into this category. Look what lending money at interest has done to our society."

I agree, and it surely lies at the root of the whole financial mess. if we hadn't allowed interest, the whole confection of finance divorced from enabling trade would not have arisen in the first place.

Diverting from the topic a bit, I'm not so sure about your first paragraph. I'm always struck by a thing the great traveller Freya Stark said:

"I think, with the possible exception of the act of love, water rights have caused more trouble than anything else in human history"

But I am not qualified to discuss the role of Sin - though I'm very grateful for your introduction of it to this threadlet, where it has born much fruit of useful points - so I'll have to leave the ethics there, I think!

ATrueFinn -> greensox , 2 Jan 2014 03:39
The Nordic countries did rather well until quite recently. Then the Neoliberalist religion arrived.
botany , 2 Jan 2014 03:37
Tobin tax on financial transactions can be of help.

We tax the food for children but not speculators play with money. France and Germany can take the lead to let the computers send a small sum on every transaction back to the people. That would be one of the few good things from EU. Otherwise let poor people starve and let the speculators play to death of our countries.

ATrueFinn -> wh1952 , 2 Jan 2014 03:37

So how many people rely on food banks? Is it half of us? One in ten, one in a hundred, one in a thousand?

The article is about a global issue, not only your backyard. The people of UK can consider themselves lucky compared with billions of others. But what would you care.

Daveinireland -> Diogenes44 , 2 Jan 2014 03:16

1. Public banking - it has no ties to corporate/international banking. N. or S. Dakota's "public bank" - begun about 90 years ago by a bunch of conservative farmers who despised the rise of bankster power.

How is this a model? The Bank of North Dakota operates more like the Bank of England than a retail bank, it doesn't offer retail services except for student loans.

2. Community-based markets - see the most famous one in Spain.
There are several one in all places, Ohio.

You may as well offer up the edinburgh bicycle cooperative as a model. Co-op exist all over the work, but they are a rounding error in the global economy. There is a place for them, but they are not going to take over from companies.

ATrueFinn -> KatieL , 2 Jan 2014 02:51

the capitalism which lets people pile up enough money to fund billion-dollar research programmes.

Such programmes are mostly funded by governments using tax money. Even in pharmaceutics the fundamental innovations and inventions are largely done in universities.

Little to do with your capitalism. Well, except that the profits of your benevolent pharmaceutical companies are exceptionally high.

hugaddict , 2 Jan 2014 02:48

Reversing financialisation is about reining in the rampant capitalism of our day.

The financial sector, CEOs, oligarchs etc run on good old fashioned greed - a commodity not about to run out anytime soon. Is it even 'reversible' ?

steverandomno , 1 Jan 2014 21:54
To summarize, you imply that capitalism and 'the market' are exemplified by government bailouts of massively overinflated banks, to allow them to continue benefiting from government created arbitrages of securitized debt and artificial regulatory economies of scale.

You go on to suggest that people's choices of dependence on large financial corporations is bad, but then imply that they would be better off if they were instead dependent on a single monopoly corporation to which they have no choice in belonging.

This is the problem with almost all attacks on capitalism and free markets. They incorrectly ascribe our present system to the same and fail to recognise the similarities between dysfunctional private and public corporate entities.

KSurin -> succulentpork , 1 Jan 2014 20:34

Making up a term - financialisation - and using to describe all use of money and also certain aspects of finance itself actual makes analysing problems harder. You are actually over generalising which makes you prone to creating narrative fallacies.

Porky, the term 'financialisation' has wide currency in economics, and refers to a specific set of transformations in the structure of accumulation. It is not used 'to describe all banking', etc. The Oxford-trained economist Thomas Palley provides this succinct definition of it:

Financialization is a process whereby financial markets, financial institutions, and financial elites gain greater influence over economic policy and economic outcomes.

Financialization transforms the functioning of economic systems at both the macro and micro levels.

Its principal impacts are to (1) elevate the significance of the financial sector relative to the real sector, (2) transfer income from the real sector to the financial sector, and (3) increase income inequality and contribute to wage stagnation. Additionally, there are reasons to believe that financialization may put the economy at risk of debt deflation and prolonged recession.

Financialization operates through three different conduits: changes in the structure and operation of financial markets, changes in the behavior of nonfinancial corporations, and changes in economic policy.

Countering financialization calls for a multifaceted agenda that (1) restores policy control over financial markets, (2) challenges the neoliberal economic policy paradigm encouraged by financialization, (3) makes corporations responsive to interests of stakeholders other than just financial markets, and (4) reforms the political process so as to diminish the influence of corporations and wealthy elites.

See http://www.levyinstitute.org/pubs/wp_525.pdf

paradise33 , 1 Jan 2014 20:30
The financialisation of UK society reached a farcical nadir when the DWP began describing benefit claimants as 'customers'.

Interestingly, in this case the 'customer' is frequently 'wrong' - and is punished accordingly.

Elephantmoth -> wh1952 , 1 Jan 2014 20:28
For some, 'Too much is not enough'. If you want the facts about who is paying for the worship of individual whims, see this:
http://www.poverty.ac.uk/sites/default/files/attachments/The_Impoverishment_of_the_UK_PSE_UK_first_results_summary_report_March_28.pdf
KSurin -> selfraisingfred , 1 Jan 2014 19:54

They used interest rates to control inflation, come what may, which is precisely what Maggie instigated after any ideas of cooperation had been rejected by the unions, during Callaghan's time in office.

Thatcher used interest rates to create unemployment, not control inflation.

Sir Alan Budd (a top Treasury civil servant and Thatcher adviser, a strong supporter of monetarism, who became Provost of The Queen's College, Oxford) let this cat out of the bag:

"The Thatcher government never believed for a moment that [monetarism] was the correct way to bring down inflation. They did however see that this would be a very good way to raise unemployment. And raising unemployment was an extremely desirable way of reducing the strength of the working classes. [...] What was engineered – in Marxist terms – was a crisis of capitalism which re- created the reserve army of labour, and has allowed the capitalists to make high profits ever since."

Quoted in Nick Cohen, "Gambling with our future", New Statesman, 13 January 2003, page 13.

Raytrek -> kimdriver , 1 Jan 2014 19:54
The way I see it is you have the elite class, made of leaders, executives, industrialists, experts, then you have the common hordes.

Common people are like a horse, the elite are like the rider, the horse doesn't mind the rider, the rider is firm with the reigns and keeps the horse controlled, but then if the rider starts to pull too firmly on the reins, the bridle causes discomfort, even pain, to the horse, with the crop whipping and the spurs digging in, you push the horse too far and it will throw you.

The rider will inevitably, albeit gingerly, get back in the saddle, a little wiser. I have no problem with this setup, but I know the rider has a short memory, and it is a case of taking care of all your horses, not just the one you ride, because nags are always trouble and they are worth a lot more when well taken care of.

This is a bad analogy, I know, but it is basically true; a phenomenal amount of problems in communities and the world are due to inadequacies, unfortunately the symptoms of these inadequacies are also big business and the economy would be disturbed by solving them, so we see "austerity" preserving what we should be curing.

mereEngineer , 1 Jan 2014 19:53
Make Bank executives personally responsible for the liabilities of the banks they are directors of. Just like entrepreneurs are often personally responsible for their companies debts.
londongapp , 1 Jan 2014 19:44
I am not sure I would use the description of 'Financialisation'. I would describe it more as the difference between wealth and money. Money is a means of exchange. It is not wealth. In London it is possible to buy a one bedroomed flat for over one million pounds. In some parts of the country a similar flat could be bought for forty thousand pounds or less. The wealth is the property and the money is the means of exchange. Just because my house goes up in value does not mean I have more wealth. My house is unchanged. It is true that if I sold my house and realised the money I might then be able buy a similar house for less money else where. Then with the surplus money I could exchange that for more wealth in the form of goods elsewhere. However as a society no wealth has been generated.
Only if money is used to create wealth in the form of goods and some services does wealth of society increase.
It is the essential difference between wealth and money that is constantly missed by Politicians and Economists.
Herbolzheim -> someoneionceknew , 1 Jan 2014 19:43
of course you are right

left and right, governments - ideally democratically elected - have bossed markets. sometimes rightly so.

Herbolzheim -> MawalTrees , 1 Jan 2014 19:40
good post mate. Thanks for taking the time

Raytrek -> kimdriver , 1 Jan 2014 19:39
Ideally it would be about drawing lines of decency between rights and responsibility; of course everyone wants more rights than responsibility and will fight for that, wether they are just an ordinary person or someone who actually has a high impact sphere of influence, and most people will allow that person that right because they view thing in terms relative to their own context and basically want the same thing.

It isn't about doing anything at gun point, it is about drawing clear lines of decency between rights and responsibility, at which point it becomes a case of people knowing what they and others can and cannot, should and should not, get away with. It isn't about punishment or forcing people to do this or that, it is about natural repercussion that comes from inconsiderate behaviour, it is about logically creating an environment that doesn't want to see you lynched.

[Oct 06, 2017] How Economists Turned Corporations into Predators

Highly recommended!
The idea the a scientist can be a gangster was probably first presented by Sir Arthur Conan Doyle in his famous Sherlock Holmes detective stories. Neoliberalism just made this a reality. Mass production of "scientific gangsters" is an immanent feature of neoliberalism.
Notable quotes:
"... By Lynn Parramore, Senior Research Analyst at the Institute for New Economic Thinking. Originally published at the Institute for New Economic Thinking website ..."
"... The Idea That Businesses Exist Solely to Enrich Shareholders Is Harmful Nonsense ..."
"... Neil Fligstein wrote a good book awhile back called The Transformation of Corporate Control that shows how most large manufacturing companies were initially run by engineers, then sales people, then finance people (as corporations came to be seen as bundles of assets as opposed to businesses). I think this transformation paralleled the rise of neoclassical economics. So, not so much "chicken-and-egg" as "class war." In Germany, at least until recently, I believe CEO's of manufacturing firms were still disproportionately engineers. ..."
"... a group of hedge fund activists can suck the value that you've created right out, driving your company down and making you worse off and the company financially fragile ..."
"... That means transforming business education, including the replacement of agency theory with innovation theory ..."
"... since gigantism is the norm, rather than family run farms in a mostly agrarian economy such failures are catastrophic. The linkage between these elephants tends to create systemic risk. Previously, failure was small and isolated. ..."
"... Welcome to our wonderful new world of infinite mutual vulnerability! Risk On! Nuclear weapons, Equifax, Googleamazon, NSApanopticon, FIRE, hacking, crapification The Soviet Union vanished as an entity, many starved, but the mopes there at least still knew how to raise up edible crops and live on "less" and maybe do better collective response to that sharp peak on the entropy curve. Wonder how things might play out exceptionally, here in the Empire? ..."
"... It should be noted that Michael Jensen of HBS, one of the originators of the `maximize shareholder value' of corporate governance, is on some short lists for this year's not-exactly-the-Nobel Prize in Economics. ..."
Oct 06, 2017 | www.nakedcapitalism.com

By Lynn Parramore, Senior Research Analyst at the Institute for New Economic Thinking. Originally published at the Institute for New Economic Thinking website

The Idea That Businesses Exist Solely to Enrich Shareholders Is Harmful Nonsense

In a new INET paper featured in the Financial Times , economist William Lazonick lays out a theory about how corporations can work for everyone – not just a few executives and Wall Streeters. He challenges a set of controversial ideas that became gospel in business schools and the mainstream media starting in the 1980s. He sat down with INET's Lynn Parramore to discuss.

Lynn Parramore: Since the 1980s, business schools have touted "agency theory," a controversial set of ideas meant to explain how corporations best operate. Proponents say that you run a business with the goal of channeling money to shareholders instead of, say, creating great products or making any efforts at socially responsible actions such as taking account of climate change. Many now take this view as gospel, even though no less a business titan than Jack Welch, former CEO of GE, called the notion that a company should be run to maximize shareholder value "the dumbest idea in the world." Why did Welch say that?

William Lazonick: Welch made that statement in a 2009 interview , just ahead of the news that GE had lost its S&P Triple-A rating in the midst of the financial crisis. He explained that, "shareholder value is a result, not a strategy" and that a company's "main constituencies are your employees, your customers and your products." During his tenure as GE CEO from 1981 to 2001, Welch had an obsession with increasing the company's stock price and hitting quarterly earnings-per-share targets, but he also understood that revenues come when your company generates innovative products. He knew that the employees' skills and efforts enable the company to develop those products and sell them.

If a publicly-listed corporation succeeds in creating innovative goods or services, then shareholders stand to gain from dividend payments if they hold shares or if they sell at a higher price. But where does the company's value actually come from? It comes from employees who use their collective and cumulative learning to satisfy customers with great products. It follows that these employees are the ones who should be rewarded when the business is a success. We've become blinded to this simple, obvious logic.

LP: What have these academic theorists missed about how companies really operate and perform? How have their views impacted our economy and society?

WL: As I show in my new INET paper " Innovative Enterprise Solves the Agency Problem ," agency theorists don't have a theory of innovative enterprise. That's strange, since they are talking about how companies succeed.

They believe that to be efficient, business corporations should be run to "maximize shareholder value." But as I have argued in another recent INET paper , public shareholders at a company like GE are not investors in the company's productive capabilities.

LP: Wait, as a stockholder I'm not an investor in the company's capabilities?

WL: When you buy shares of a stock, you are not creating value for the company -- you're just a saver who buys shares outstanding on the stock market for the sake of a yield on your financial portfolio. Public shareholders are value extractors , not value creators.

By touting public shareholders as a corporation's value creators, agency theorists lay the groundwork for some very harmful activities. They legitimize "hedge fund activists," for example. These are aggressive corporate predators who buy shares of a company on the stock market and then use the power bestowed upon them by the ill-conceived U.S. proxy voting system, endorsed by the Securities and Exchange Commission (SEC), to demand that the corporation inflate profits by cutting costs. That often means mass layoffs and depressed incomes for anybody who remains. In an industry like pharmaceuticals , the activists also press for extortionate product price increases. The higher profits tend to boost stock prices for the activists and other shareholders if they sell their shares on the market.

LP: So the hedge fund activists are extracting value from a corporation instead of creating it, and yet they are the ones who get enriched.

WL: Right. Agency theory aids and abets this value extraction by advocating, in the name of "maximizing shareholder value," massive distributions to shareholders in the form of dividends for holding shares as well as stock buybacks that you hear about, which give manipulative boosts to stock prices. Activists get rich when they sell the shares. The people who created the value -- the employees -- often get poorer.

###p"downsize-and-distribute" -- something that corporations have been doing since the 1980s, which has resulted in extreme concentration of income among the richest households and the erosion of middle-class employment opportunities.

LP: You've called stock buybacks -- what happens when a company buys back its own shares from the marketplace, often to manipulate the stock price upwards -- the "legalized looting of the U.S. business corporation." What's the problem with this practice?

WL: If you buy shares in Apple, for example, you can get a dividend for holding shares and, possibly, a capital gain when you sell the shares. Since 2012, when Apple made its first dividend payment since 1996, the company has shelled out $57.4 billion as dividends, equivalent to over 22 percent of net income. That's fine. But the company has also spent $157.9 billion on stock buybacks, equal to 62 percent of net income.

Yet the only time in its history that Apple ever raised funds on the public stock market was in 1980, when it collected $97 million in its initial public offering. How can a corporation return capital to parties that never supplied it with capital? It's a very misleading concept.

The vast majority of people who hold Apple's publicly-listed shares have simply bought outstanding shares on the stock market. They have contributed nothing to Apple's value-creating capabilities. That includes veteran corporate raider Carl Icahn, who raked in $2 billion by holding $3.6 billion in Apple shares for about 32 months, while using his influence to encourage Apple to do $80.3 billion in buybacks in 2014-2015, the largest repurchases ever. Over this period, Apple, the most cash-rich company in history, increased its debt by $47.6 billion to do buybacks so that it would not have to repatriate its offshore profits, sheltered from U.S. corporate taxes.

There are many ways in which the company could have returned its profits to employees and taxpayers -- the real value creators -- that are consistent with an innovative business model. Instead, in doing massive buybacks, Apple's board (which includes former Vice President Al Gore) has endorsed legalized looting. The SEC bears a lot of blame. It's supposed to protect investors and make sure financial markets are free of manipulation. But back in 1982, the SEC bought into agency theory under Reagan and came up with a rule that gives corporate executives a "safe harbor" against charges of stock-price manipulation when they do billions of dollars of buybacks for the sole purpose of manipulating their company's stock price.

LP: But don't shareholders deserve some of the profits as part owners of the corporation?

WL: Let's say you buy stock in General Motors. You are just buying a share that is outstanding on the market. You are contributing nothing to the company. And you will only buy the shares because the stock market is highly liquid, enabling you to easily sell some or all of the shares at any moment that you so choose.

In contrast, people who work for General Motors supply skill and effort to generate the company's innovative products. They are making productive contributions with expectations that, if the innovative strategy is successful, they will share in the gains -- a bigger paycheck, employment security, a promotion. In providing their labor services, these employees are the real value creators whose economic futures are at risk.

LP: This is really different from what a lot of us have been taught to believe. An employee gets a paycheck for showing up at work -- there's your reward. When we take a job, we probably don't expect management to see us as risk-takers entitled to share in the profits unless we're pretty high up.

WL: If you work for a company, even if its innovative strategy is a big success, you run a big risk because under the current regime of "maximizing shareholder value" a group of hedge fund activists can suck the value that you've created right out, driving your company down and making you worse off and the company financially fragile. And they are not the only predators you have to deal with. Incentivized with huge amounts of stock-based pay, senior corporate executives will, and often do, extract value from the company for their own personal gain -- at your expense. As Professor Jang-Sup Shin and I argue in a forthcoming book, senior executives often become value-extracting insiders. And they open the corporate coffers to hedge fund activists, the value-extracting outsiders. Large institutional investors can use their proxy votes to support corporate raids, acting as value-extracting enablers.

You put in your ideas, knowledge, time, and effort to make the company a huge success, and still you may get laid off or find your paycheck shrinking. The losers are not only the mass of corporate employees -- if you're a taxpayer, your money provides the business corporation with physical infrastructure, like roads and bridges, and human knowledge, like scientific discoveries, that it needs to innovate and profit. Senior corporate executives are constantly complaining that they need lower corporate taxes in order to compete, when what they really want is more cash to distribute to shareholders and boost stock prices. In that system, they win but the rest of us lose .

LP: Some academics say that hedge fund activism is great because it makes a company run better and produce higher profits. Others say, "No, Wall Streeters shouldn't have more say than executives who know better how to run the company." You say that both of these camps have got it wrong. How so?

WL: A company has to be run by executive insiders, and in order to produce innovation these executives have got to do three things:

First you need a resource-allocation strategy that, in the face of uncertainty, seeks to generate high-quality, low-cost products. Second, you need to implement that strategy through training, retaining, motivating, and rewarding employees, upon whom the development and utilization of the organization's productive capabilities depend. Third, you have to mobilize and leverage the company's cash flow to support the innovative strategy. But under the sway of the "maximizing shareholder value" idea, many senior corporate executives have been unwilling, and often unable, to perform these value-creating functions. Agency theorists have got it so backwards that they actually celebrate the virtues of " the value extracting CEO ." How strange is that?

Massive stock buybacks is where the incentives of corporate executives who extract value align with the interests of hedge fund activists who also want to suck value from a corporation. When they promote this kind of alliance, agency theorists have in effect served as academic agents of activist aggression. Lacking a theory of the value-creating firm, or what I call a "theory of innovative enterprise," agency theorists cannot imagine what an executive who creates value actually does. They don't see that it's crucial to align executives' interests with the value-creating investment requirements of the organizations over which they exercise strategic control. This intellectual deficit is not unique to agency theorists; it is inherent in their training in neoclassical economics .

LP: So if shareholders and executives are too often just looting companies to enrich themselves – "value extraction," as you put it – and not caring about long-term success, who is in a better position to decide how to run them, where to allocate resources and so on?

WL: We need to redesign corporate-governance institutions to promote the interests of American households as workers and taxpayers. Because of technological, market, or competitive uncertainties, workers take the risk that the application of their skills and the expenditure of their efforts will be in vain. In financing investments in infrastructure and knowledge, taxpayers make productive capabilities available to business enterprises, but with no guaranteed return on those investments.

These stakeholders need to have representation on corporate boards of directors. Predators, including self-serving corporate executives and greed-driven shareholder activists, should certainly not have representation on corporate boards.

LP: Sounds like we've lost sight of what a business needs to do to be successful in the long run, and it's costing everybody except a handful of senior executives, hedge fund managers, and Wall Street bankers. How would your "innovation theory" help companies run better and make for a healthier economy and society?

WL: Major corporations are key to the operation and performance of the economy. So we need a revolution in corporate governance to get us back on track to stable and equitable economic growth. Besides changing board representation, I would change the incentives for top executives so that they are rewarded for allocating corporate resources to value creation. Senior executives should gain along with the rest of the organization when the corporation is successful in generating competitive products while sharing the gains with workers and taxpayers.

Innovation theory calls for changing the mindsets and skill sets of senior executives. That means transforming business education, including the replacement of agency theory with innovation theory. That also means changing the career paths through which corporate personnel can rise to positions of strategic control, so that leaders who create value get rewarded and those who extract it are disfavored. At the institutional level, it would be great to see the SEC, as the regulator of financial markets, take a giant step in supporting value creation by banning stock buybacks whose purpose it is to manipulate stock prices.

To get from here to there, we have to replace nonsense with common sense in our understanding of how business enterprises operate and perform.

Enquiring Mind , October 6, 2017 at 10:44 am

Owners come first!
That was the slogan of our former board chair. He didn't disclose to the employees that his compensation was influenced mightily by how big the net income was. He did tell the employees that they were well down the hierarchy, after Owners (capital O) and then vendors and then customers. His former employees deserted in droves.

RepubAnon , October 6, 2017 at 12:14 pm

I'd say that maximizing long-term shareholder value is a great idea the problem is, as is so often the case these days, short-term thinking.

Driving away a company's best employees makes that quarter's numbers look better, but destroys long-term value. Same thing for so many other short-term, "I'll be gone, you'll be gone" strategies.

One step to fixing things – change the definition of long-term capital gains from the current 1 year to, say, 5 years. This "one simple trick" would fix everything from the carried interest loophole to the abuses inherent in the current Wall Street gambling mentality.

It won't happen, of course, but it'd be nice.

Tim , October 6, 2017 at 2:21 pm

We can talk about what is best in theory, but reality is just that, shareholders come first.

They control the board and the CEO and the CEO institutes the will of the shareholders down into the business entities, determining the level of reinvestment in the business units and the level of employee compensation. That will continue to be the case until the company goes bankrupt at which point shareholders are entitled to nothing.

I agree with others that Jack Welch is saying what he is saying after the fact. Way too easy to do.

a different chris , October 6, 2017 at 10:47 am

>Welch had an obsession with increasing the company's stock price and hitting quarterly earnings-per-share targets, but he also understood

Yeah so he talks a good game but when he had the reins – one of the most powerful men in the world meekly (ok, that's a hilarious adjective when applied to Jack Welsh) followed the herd. Or more accurately, found out where the herd was heading and got out in front of it. The true sign of modern "leadership".

RepubAnon , October 6, 2017 at 12:20 pm

Folks at GE back in the day nicknamed him "Neutron Jack" – if he visited a site, all the employees disappeared, leaving only the buildings standing

digi_owl , October 6, 2017 at 1:06 pm

Or more accurately, found out where the herd was heading and got out in front of it. The true sign of modern "leadership".

Reminds me of something i have read, supposedly a quite from some politician or other, going to the tune of "i need to find out where the mob is going, so i can lead them there".

Left in Wisconsin , October 6, 2017 at 1:06 pm

Welch's primary business strategy at GE was to exit every product market in which GE's market share was not in the top two in the industry (selling them off or closing them down) and reallocate resources to industries where GE was market dominant, often buying up the competition rather than truly investing in innovation. A truly awful human being.

Synoia , October 6, 2017 at 11:18 am

As I personally have always believed, Employees have more invested in their employers than shareholders. Shareholders can sell quickly and have no loyalty. Employees do not enjoy such a liquid "jobs market."

There also seems to be a turning point in companies, where they change the perception of the customers form a group to be treasured, to a group who are to b exploited – change the relationship so the customers become "marks."

I also believe there should be an almost automatic "break -up" provision for companies who reach a certain market share.

Finally there should be one definition of income, and it should include Wages, Dividends, and Capital Gains.

Vatch , October 6, 2017 at 11:27 am

there should be an almost automatic "break -up" provision for companies who reach a certain market share.

Yes, anti-trust enforcement would be nice. Hypothetical President Sanders might actually do that. Real and hypothetical Presidents Bush, Obama, Romney, B. Clinton, H. Clinton, and Trump have other priorities.

readerOfTeaLeaves , October 6, 2017 at 12:15 pm

Sen Bernie Sanders sees right through the neoclassical fetters, blinders, and bullshit. He recognizes how intellectually and economically stagnant and dangerous it is. He has the most powerful conceptual, articulate grasp of economics that I've seen the past 40 years. He also, IIRC, had MMTer Stephanie Kelton as an advisor, and had her advise the Senate Finance Committee. Also notable: Sen Elizabeth Warren.

The other political operators that you mention are still in thrall to neoclassical assumptions. They mistake 'takers' for 'makers' and are economically bamboozled. And it has worked out well for all of them, on a personal basis, so it is not surprising that they don't see the problems.

Anyone actually trying to build an innovative business, OTOH, has to see through the bamboozlement or else you're out of business pronto.

JTMcPhee , October 6, 2017 at 12:05 pm

Chicken and egg question:

The class of humans that by inclination and opportunity become C-Suite and VC looters and "owners:" did they precede the imprimatur of "economists" with their notions of price, value, and crossing of curves, or did the "economists" do a Martin Luther, nail up a bunch of theses, and preach fire and brimstone to turn the greedheads loose?

And was/is any other outcome for the species and the planet even possible?

Left in Wisconsin , October 6, 2017 at 1:14 pm

Neil Fligstein wrote a good book awhile back called The Transformation of Corporate Control that shows how most large manufacturing companies were initially run by engineers, then sales people, then finance people (as corporations came to be seen as bundles of assets as opposed to businesses). I think this transformation paralleled the rise of neoclassical economics. So, not so much "chicken-and-egg" as "class war." In Germany, at least until recently, I believe CEO's of manufacturing firms were still disproportionately engineers.

Carla , October 6, 2017 at 3:05 pm

"most large manufacturing companies were initially run by engineers, then sales people, then finance people"

The Lincoln Electric Company, which became famous for its "Incentive Management" program of compensating employees, was a client of mine. Over three decades I saw it progress through precisely those stages, and gradually lose every characteristic that had made the company unique.

readerOfTeaLeaves , October 6, 2017 at 12:30 pm

This post was a genuine pleasure to read. Especially:

If you work for a company, even if its innovative strategy is a big success, you run a big risk because under the current regime of "maximizing shareholder value" a group of hedge fund activists can suck the value that you've created right out, driving your company down and making you worse off and the company financially fragile .

And we've had a government by and for hedge fund managers for about the same amount of time that we've had economic woes. One problem is that hedge funders like Romney, who actually don't think about consumer product development, actually don't have to test and deploy products, bring their bean-counter assumptions to business and make a hash of things. I mention Romney specifically, because he presents himself to the world as a paragon of economic wisdom.

Romney has a prestigious business school background. Which makes me want to highlight this:

Innovation theory calls for changing the mindsets and skill sets of senior executives. That means transforming business education, including the replacement of agency theory with innovation theory .

JTMcPhee , October 6, 2017 at 12:59 pm

Just a thought: "innovation theory," like MMT, is maybe just a tool set? "Innovation" includes "autonomous combat devices," and CRSP-R, and nuclear weapons, and the F-35, and fracking, and derivatives, and plastics, and charter schools, stuff and ideas that for some of us constitute "value" are corporations as the category has grown to be, any more likely to "innovate" in the areas of social improvements and possibilities, or stewardship of the planet, or close down the toll stations and all the other rent collection scams and extortions they have "innovated" to date? Or release their chokehold on "policy?"

Says the proponent: "Major corporations are key to the operation and performance of the economy. So we need a revolution in corporate governance to get us back on track to stable and equitable economic growth. Besides changing board representation, I would change the incentives for top executives so they are rewarded for allocating corporate resources to value creation. Senior executives should gain along with the rest of the organization when the corporation is successful in generating competitive products while sharing the gains with workers and taxpayers." There seems to be so much wrong and just more Biz-babble about this, one hardly knows where to start unpacking.

"Major corporations are key?" Really? Monsanto? GM? Bechtel? The Big Banks? And "back on track": When has the political economy, writ small or large, ever been "on track to stability and equitable growth," said "growth' itself seemingly one of the pathologies that's killing us? And who's going to write the entries for the corporate senior executives' dance cards that will measure their "success," in those feel-good categories?

But it's a good conversation piece, and maybe an opening into Something Better, however us inherently mostly self-interested, self-pleasing omnivorous predators might define "better "

Disturbed Voter , October 6, 2017 at 12:36 pm

Badly run companies, naturally extinguish themselves. Unfortunately they take down their customers, owners, vendors and employees in the process. But the government can step in and either save a company that otherwise would die, or act as a crony corruption partner on behalf of a well connected company. Same as it always was.

But since gigantism is the norm, rather than family run farms in a mostly agrarian economy such failures are catastrophic. The linkage between these elephants tends to create systemic risk. Previously, failure was small and isolated.

JTMcPhee , October 6, 2017 at 1:06 pm

Welcome to our wonderful new world of infinite mutual vulnerability! Risk On! Nuclear weapons, Equifax, Googleamazon, NSApanopticon, FIRE, hacking, crapification The Soviet Union vanished as an entity, many starved, but the mopes there at least still knew how to raise up edible crops and live on "less" and maybe do better collective response to that sharp peak on the entropy curve. Wonder how things might play out exceptionally, here in the Empire?

allan , October 6, 2017 at 12:48 pm

It should be noted that Michael Jensen of HBS, one of the originators of the `maximize shareholder value' of corporate governance, is on some short lists for this year's not-exactly-the-Nobel Prize in Economics.

[Oct 06, 2017] Prof. Philip Mirowski keynote for Life and Debt conference

Highly recommended!
Among interesting ideas that Mirkowski presented in this lecture are "privatization of science" -- when well paid intellectual prostitutes produce the reuslt which are expected by their handlers. the other is his thought on the difference between neoclassical economics and neoliberalism. Neoliberalism believes in state intervention and this intervention should take the form of enforcing market on all spheres of human society.
Another interesting idea that neoliberalism in many cases doe not need the success of its ideas. The failure can also be exploited for enforcing "more market" on the society.
In other words market fundamentalism has all features of civil religion and like in Middle Ages it is enforced from above. heretics are not burned at the stake but simply ostracized.
Notable quotes:
"... how it is that science came to be subordinate to economics and the very future of nature to be contingent upon the market. ..."
"... As a leading exponent of the Institutional school, he has published formal treatments of financial markets that update Minsky's 'financial instability hypothesis' for the world of computerised derivative trading. ..."
Aug 18, 2013 | www.youtube.com

Life and Debt: Living through the Financialisation of the Biosphere

How can it be that the climate crisis, the biodiversity crisis and the deepest financial crisis since 1930s have done so little to undermine the supremacy of orthodox economics?

The lecture will preview material from Mirowski's new book: Never Lt a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown (Verso, 2013).

In this lecture, Professor Mirowski responds to the question of how it is that science came to be subordinate to economics and the very future of nature to be contingent upon the market. Charting the contradictions of the contemporary political landscape, he notes that science denialism, markets for pollution permits and proposals for geo-engineering can all be understood as political strategies designed to neutralize the impact of environmentalism, as they all originated in the network of corporate-sponsored think-tanks that have made neoliberal accounts of society, politics and the economy so prevalent that even the most profound crises are unable to shake their grip on the political imagination.

For those of us who are still paying attention, the task of constructing an alternative politics of science and markets is a vital one.

Philip Mirowski is Carl E. Koch Professor at the University of Notre Dame, Indiana. His most famous book, More Heat Than Light: Economics as Social Physics (1989) established his reputation as a formidable critic of the scientific status of neoclassical economics. His Machine Dreams: Economics becomes a Cyborg Science (2002) presents a history of the Cold War consolidation of American economic orthodoxy in the same intellectual milieu that produced systems theory, the digital computer, the atomic bomb, the strategy of Mutually Assured Destruction, and the 'think tank'. The Road from Mont Pelerin: the Making of the Neoliberal Thought Collective (with Dieter Plewhe, 2009), drawn from the archives of the Mont Pelerin Society and the Chicago School, presents a scholarly history of neoliberalism: the political movement initiated by Friedrich Hayek and Milton Friedman in the 1940s, which has since become the world's dominant philosophy of government.

As a leading exponent of the Institutional school, he has published formal treatments of financial markets that update Minsky's 'financial instability hypothesis' for the world of computerised derivative trading.

This lecture is presented by the UTS Cosmopolitan Civil Societies Research Centre and the Australian Working Group on Financialisation at the University of Sydney.

[Oct 01, 2017] Goodbye, American neoliberalism. A new era is here by Cornel West

Notable quotes:
"... The Bush and Clinton dynasties were destroyed by the media-saturated lure of the pseudo-populist billionaire with narcissist sensibilities and ugly, fascist proclivities. The monumental election of Trump was a desperate and xenophobic cry of human hearts for a way out from under the devastation of a disintegrating neoliberal order – a nostalgic return to an imaginary past of greatness. ..."
"... This lethal fusion of economic insecurity and cultural scapegoating brought neoliberalism to its knees. In short, the abysmal failure of the Democratic party to speak to the arrested mobility and escalating poverty of working people unleashed a hate-filled populism and protectionism that threaten to tear apart the fragile fiber of what is left of US democracy. And since the most explosive fault lines in present-day America are first and foremost racial, then gender, homophobic, ethnic and religious, we gird ourselves for a frightening future. ..."
"... In this sense, Trump's election was enabled by the neoliberal policies of the Clintons and Obama that overlooked the plight of our most vulnerable citizens. The progressive populism of Bernie Sanders nearly toppled the establishment of the Democratic party but Clinton and Obama came to the rescue to preserve the status quo. And I do believe Sanders would have beat Trump to avert this neofascist outcome! ..."
"... The neoliberal era in the United States ended with a neofascist bang ..."
"... The white house and congress are now dominated by tea party politicians who worship at the altar of Ayn Rand.....read Breitbart news to see how Thatcher and Reagan are idolised. ..."
"... if you think the era of "neo liberalism" is over, you are in deep denial! ..."
"... The age of Obama was the last gasp of neoliberalism. Despite some progressive words and symbolic gestures, Obama chose to ignore Wall Street crimes, reject bailouts for homeowners, oversee growing inequality and facilitate war crimes like US drones killing innocent civilians abroad. ..."
"... Didn't Obama say to Wall Street ''I'm the only one standing between you and the lynch mob? Give me money and I'll make it all go away''. Then came into office and went we won't prosecute the Banks not Bush for a false war because we don't look back. ..."
"... He did not ignore, he actively, willingly, knowingly protected them. At the end of the day Obama is wolf in sheep's clothing. Exactly like HRC he has a public and a private position. He is a gifted speaker who knows how to say all the right, progressive liberal things to get people to go along much better than HRC ever did. ..."
"... Even when he had the Presidency, House and Senate, he never once introduced any progressive liberal policy. He didn't need Republican support to do it, yet he never even tried. ..."
Nov 17, 2016 | www.theguardian.com

The neoliberal era in the United States ended with a neofascist bang. The political triumph of Donald Trump shattered the establishments in the Democratic and Republican parties – both wedded to the rule of Big Money and to the reign of meretricious politicians.

The Bush and Clinton dynasties were destroyed by the media-saturated lure of the pseudo-populist billionaire with narcissist sensibilities and ugly, fascist proclivities. The monumental election of Trump was a desperate and xenophobic cry of human hearts for a way out from under the devastation of a disintegrating neoliberal order – a nostalgic return to an imaginary past of greatness.

White working- and middle-class fellow citizens – out of anger and anguish – rejected the economic neglect of neoliberal policies and the self-righteous arrogance of elites. Yet these same citizens also supported a candidate who appeared to blame their social misery on minorities, and who alienated Mexican immigrants, Muslims, black people, Jews, gay people, women and China in the process.

This lethal fusion of economic insecurity and cultural scapegoating brought neoliberalism to its knees. In short, the abysmal failure of the Democratic party to speak to the arrested mobility and escalating poverty of working people unleashed a hate-filled populism and protectionism that threaten to tear apart the fragile fiber of what is left of US democracy. And since the most explosive fault lines in present-day America are first and foremost racial, then gender, homophobic, ethnic and religious, we gird ourselves for a frightening future.

What is to be done? First we must try to tell the truth and a condition of truth is to allow suffering to speak. For 40 years, neoliberals lived in a world of denial and indifference to the suffering of poor and working people and obsessed with the spectacle of success. Second we must bear witness to justice. We must ground our truth-telling in a willingness to suffer and sacrifice as we resist domination. Third we must remember courageous exemplars like Martin Luther King Jr, who provide moral and spiritual inspiration as we build multiracial alliances to combat poverty and xenophobia, Wall Street crimes and war crimes, global warming and police abuse – and to protect precious rights and liberties.

Feminists misunderstood the presidential election from day one Liza Featherstone By banking on the idea that women would support Hillary Clinton just because she was a female candidate, the movement made a terrible mistake Read more

The age of Obama was the last gasp of neoliberalism. Despite some progressive words and symbolic gestures, Obama chose to ignore Wall Street crimes, reject bailouts for homeowners, oversee growing inequality and facilitate war crimes like US drones killing innocent civilians abroad.

Rightwing attacks on Obama – and Trump-inspired racist hatred of him – have made it nearly impossible to hear the progressive critiques of Obama. The president has been reluctant to target black suffering – be it in overcrowded prisons, decrepit schools or declining workplaces. Yet, despite that, we get celebrations of the neoliberal status quo couched in racial symbolism and personal legacy. Meanwhile, poor and working class citizens of all colors have continued to suffer in relative silence.

In this sense, Trump's election was enabled by the neoliberal policies of the Clintons and Obama that overlooked the plight of our most vulnerable citizens. The progressive populism of Bernie Sanders nearly toppled the establishment of the Democratic party but Clinton and Obama came to the rescue to preserve the status quo. And I do believe Sanders would have beat Trump to avert this neofascist outcome!

Click and elect: how fake news helped Donald Trump win a real election Hannah Jane Parkinson The 'alt-right' (aka the far right) ensnared the electorate using false stories on social media. But tech companies seem unwilling to admit there's a problem

In this bleak moment, we must inspire each other driven by a democratic soulcraft of integrity, courage, empathy and a mature sense of history – even as it seems our democracy is slipping away.

We must not turn away from the forgotten people of US foreign policy – such as Palestinians under Israeli occupation, Yemen's civilians killed by US-sponsored Saudi troops or Africans subject to expanding US military presence.

As one whose great family and people survived and thrived through slavery, Jim Crow and lynching, Trump's neofascist rhetoric and predictable authoritarian reign is just another ugly moment that calls forth the best of who we are and what we can do.

For us in these times, to even have hope is too abstract, too detached, too spectatorial. Instead we must be a hope, a participant and a force for good as we face this catastrophe.

theomatica -> MSP1984 17 Nov 2016 6:40

To be replaced by a form of capitalism that is constrained by national interests. An ideology that wishes to uses the forces of capitalism within a market limited only by national boundaries which aims for more self sufficiency only importing goods the nation can not itself source.

farga 17 Nov 2016 6:35

The neoliberal era in the United States ended with a neofascist bang.

Really? The white house and congress are now dominated by tea party politicians who worship at the altar of Ayn Rand.....read Breitbart news to see how Thatcher and Reagan are idolised.

That in recent decades middle ground politicians have strayed from the true faith....and now its time to go back - popular capitalism, small government, low taxes.

if you think the era of "neo liberalism" is over, you are in deep denial!

Social36 -> farga 17 Nov 2016 8:33

Maybe, West should have written that we're now in neoliberal, neofascist era!

ForSparta -> farga 17 Nov 2016 14:24

Well in all fairness, Donald Trump (horse's ass) did say he'd 'pump' money into the middle classes thus abandoning 'trickle down'. His plan/ideology is also to increase corporate tax revenues overall by reducing the level of corporation tax -- the aim being to entice corporations to repatriate wealth currently held overseas. Plus he has proposed an infrastructure spending spree, a fiscal stimulus not a monetary one. When you add in tax cuts the middle classes will feel flushed and it is within that demographic that most businesses and hence jobs are created. I think his short game has every chance of doing what he said it would.

SeeNOevilHearNOevil 17 Nov 2016 6:36

The age of Obama was the last gasp of neoliberalism. Despite some progressive words and symbolic gestures, Obama chose to ignore Wall Street crimes, reject bailouts for homeowners, oversee growing inequality and facilitate war crimes like US drones killing innocent civilians abroad.

Didn't Obama say to Wall Street ''I'm the only one standing between you and the lynch mob? Give me money and I'll make it all go away''. Then came into office and went we won't prosecute the Banks not Bush for a false war because we don't look back.

He did not ignore, he actively, willingly, knowingly protected them. At the end of the day Obama is wolf in sheep's clothing. Exactly like HRC he has a public and a private position. He is a gifted speaker who knows how to say all the right, progressive liberal things to get people to go along much better than HRC ever did.

But that lip service is where his progressive views begin and stop. It's the very reason none of his promises never translated into actions and I will argue that he was the biggest and smoothest scam artist to enter the white house who got even though that wholly opposed centre-right policies, to flip and support them vehemently. Even when he had the Presidency, House and Senate, he never once introduced any progressive liberal policy. He didn't need Republican support to do it, yet he never even tried.

ProbablyOnTopic 17 Nov 2016 6:37

I agree with some of this, but do we really have to throw around hysterical terms like 'fascist' at every opportunity? It's as bad as when people call the left 'cultural Marxists'.

LithophaneFurcifera -> ProbablyOnTopic 17 Nov 2016 7:05

True, it's sloganeering that drowns out any nuance, whoever does it. Whenever a political term is coined, you can be assured that its use and meaning will eventually be extended to the point that it becomes less effective at characterising the very groups that it was coined to characterise.

Keep "fascist" for Mussolini and "cultural Marxist" for Adorno, unless and until others show such strong resemblances that the link can't seriously be denied.

I agree about the importance of recognising the suffering of the poor and building alliances beyond, and not primarily defined by, race though.

l0Ho5LG4wWcFJsKg 17 Nov 2016 6:40
Hang about Trump is the embodiment of neo-liberalism. It's neo-liberalism with republican tea party in control. He's not going to smash the system that served him so well, the years he manipulated and cheated, why would he want to change it.
garrylee -> l0Ho5LG4wWcFJsKg 17 Nov 2016 9:38
West's point is that it's beyond Trump's control. The scales have fallen from peoples eyes. They now see the deceit of neo-liberalism. And once they see through the charlatan Trump and the rest of the fascists, they will, hopefully, come to realize the only antidote to neo-liberalism is a planned economy.

Nash25 17 Nov 2016 6:40

This excellent analysis by professor West places the current political situation in a proper historical context.

However, I fear that neo-liberalism may not be quite "dead" as he argues.

Most of the Democratic party's "establishment" politicians, who conspired to sabotage the populist Sanders's campaign, still dominate the party, and they, in turn, are controlled by the giant corporations who fund their campaigns.

Democrat Chuck Schumer is now the Senate minority leader, and he is the loyal servant of the big Wall Street investment banks.

Sanders and Warren are the only two Democratic leaders who are not neo-liberals, and I fear that they will once again be marginalized.

Rank and file Democrats must organize at the local and state level to remove these corrupt neo-liberals from all party leadership positions. This will take many years, and it will be very difficult.


VenetianBlind 17 Nov 2016 6:42

Not sure Neo-Liberalism has ended. All they have done is get rid of the middle man.

macfeegal 17 Nov 2016 6:46

It would seem that there is a great deal of over simplifying going on; some of the articles represent an hysteric response and the vision of sack cloth and ashes prevails among those who could not see that the wheels were coming off the bus. The use of the term 'liberal' has become another buzz word - there are many different forms of liberalism and creating yet another sound byte does little to illuminate anything.

Making appeals to restore what has been lost reflects badly upon the central political parties, with their 30 year long rightward drift and their legacy of sucking up to corporate lobbyists, systems managers, box tickers and consultants. You can't give away sovereign political power to a bunch of right wing quangos who worship private wealth and its accumulation without suffering the consequences. The article makes no contribution (and neither have many of the others of late) to any kind of alternative to either neo-liberalism or the vacuum that has become a question mark with the dark face of the devil behind it.

We are in uncharted waters. The conventional Left was totally discredited by1982 and all we've had since are various forms of modifications of Thatcher's imported American vision. There has been no opposition to this system for over 40 years - so where do we get the idea that democracy has any real meaning? Yes, we can vote for the Greens, or one of the lesser known minority parties, but of course people don't; they tend to go with what is portrayed as the orthodoxy and they've been badly let down by it.

It would be a real breath of fresh air to see articles which offer some kind of analysis that demonstrates tangible options to deal with the multiple crises we are suffering. Perhaps we might start with a consideration that if our political institutions are prone to being haunted by the ghost of the 1930's, the state itself could be seen as part of the problem rather than any solution. Why is it that every other institution is considered to be past its sell by date and we still believe in a phantom of democracy? Discuss.

VenetianBlind -> macfeegal 17 Nov 2016 7:00

I have spent hours trying to see solutions around Neo-Liberalism and find that governments have basically signed away any control over the economy so nothing they can do. There are no solutions.

Maybe that is the starting point. The solution for workers left behind in Neo-Liberal language is they must move. It demands labor mobility. It is not possible to dictate where jobs are created.

I see too much fiddly around the edges, the best start is to say they cannot fix the problem. If they keep making false promises then things will just get dire as.

[Oct 01, 2017] Attempts to buy US elections using perverted notion of free speech were deliberate. This is an immanent feature of neoliberalism which being Trotskyism for the rich deny democracy for anybody outside the top one percent (or, may be, top 10-20 percent)

Highly recommended!
In 1970th the new neoliberal "capitalists of all countries, unite !" slogan displaced the old one: "Proletarians of all countries, unite!" Since the late 70th, the leading capitalist states in North America and Western Europe have pursued neoliberal policies and institutional changes. The peripheral and semi peripheral states in Latin America, Africa, Asia, and Eastern Europe, under the pressure of the leading capitalist states (primarily the United States) and international monetary institutions (IMF and the World Bank), were forced to adopt "structural adjustments," "shock therapies," or "economic reforms," to open their economies to transactionals and to restructure them in accordance with the requirements of the global neoliberal empire led by the USA.
The regime enforced in countries of the global neoliberal empire typically includes monetarist policies to lower inflation and maintain fiscal balance (often achieved by reducing public expenditures and raising the interest rate), "flexible" labor markets (meaning removing labor market regulations, cutting social welfare and facilitating legal and illegal immigration from poor countries to drive wages down), trade and financial liberalization, and privatization. These policies were an attack by the global finance capital on the working people of the world. Under neoliberal capitalism, decades of social progress and developmental efforts have been reversed. Global inequality in income and wealth has reached unprecedented levels sometimes exceeding the level reached in 1920th. In much of the world, working people have suffered pauperization. Entire countries have been reduced to misery.
Notable quotes:
"... What's missing here is the way in which the capitalist class orchestrated its efforts during the 1970s and early 1980s. I think it would be fair to say that at that time - in the English-speaking world anyway - the corporate capitalist class became pretty unified. ..."
"... For example, you see reforms of campaign finance that treated contributions to campaigns as a form of free speech . There's a long tradition in the United States of corporate capitalists buying elections but now it was legalized rather than being under the table as corruption. ..."
"... Overall I think this period was defined by a broad movement across many fronts, ideological and political. And the only way you can explain that broad movement is by recognizing the relatively high degree of solidarity in the corporate capitalist class. ..."
www.jacobinmag.com
What's missing here is the way in which the capitalist class orchestrated its efforts during the 1970s and early 1980s. I think it would be fair to say that at that time - in the English-speaking world anyway - the corporate capitalist class became pretty unified.

They agreed on a lot of things, like the need for a political force to really represent them. So you get the capture of the Republican Party, and an attempt to undermine, to some degree, the Democratic Party.

From the 1970s the Supreme Court made a bunch of decisions that allowed the corporate capitalist class to buy elections more easily than it could in the past.

For example, you see reforms of campaign finance that treated contributions to campaigns as a form of free speech. There's a long tradition in the United States of corporate capitalists buying elections but now it was legalized rather than being under the table as corruption.

Overall I think this period was defined by a broad movement across many fronts, ideological and political. And the only way you can explain that broad movement is by recognizing the relatively high degree of solidarity in the corporate capitalist class.

Capital reorganized its power in a desperate attempt to recover its economic wealth and its influence, which had been seriously eroded from the end of the 1960s into the 1970s.

[Oct 01, 2017] Bulletproof Neoliberalism by Paul Heideman

Highly recommended!
Notable quotes:
"... Mirowski identifies three basic aspects of neoliberalism that the Left has failed to understand: the movement's intellectual history, the way it has transformed everyday life, and what constitutes opposition to it. Until we come to terms with them, Mirowski suggests, right-wing movements such as the Tea Party (a prominent player in the book) will continue to reign triumphant. ..."
"... Joining a long line of thinkers, most famously Karl Polanyi, Mirowski insists that a key error of the Left has been its failure to see that markets are always embedded in other social institutions. Neoliberals, by contrast, grasp this point with both hands -- and therefore seek to reshape all of the institutions of society, including and especially the state, to promote markets. Neoliberal ascendancy has meant not the retreat of the state so much as its remaking. ..."
"... he also recognizes that the neoliberals themselves have been canny about keeping the real nature of their project hidden through a variety of means. Neoliberal institutions tend to have what he calls a "Russian doll" structure, with the most central ones well hidden from public eyes. Mirowski coins an ironic expression, "the Neoliberal Thought Collective," for the innermost entities that formulate the movement's doctrine. The venerable Mont Pelerin Society is an NTC institution. Its ideas are frequently disseminated through venues which, formally at least, are unconnected to the center, such as academic economics departments. Thus, neoclassical economists spread the gospel of the free market while the grand project of remaking the state falls to others. ..."
"... At the same time as neoliberal commonsense trickles down from above, Mirowski argues that it also wells up from below, reinforced by our daily patterns of life. Social networking sites like Facebook encourage people to view themselves as perpetual cultural entrepreneurs, striving to offer a newer and better version of themselves to the world. Sites like LinkedIn prod their users to present themselves as a fungible basket of skills, adjustable to the needs of any employer, without any essential characteristics beyond a requisite subservience. Classical liberalism always assumes the coherent individual self as its basic unit. Neoliberalism, by contrast, sees people as little more than variable bundles of human capital, with no permanent interests or even attributes that cannot be remade through the market. For Mirowski, the proliferation of these forms of everyday neoliberalism constitute a "major reason the neoliberals have emerged from the crisis triumphant." ..."
"... Finally, Mirowski argues that the Left has too often been sucked in by neoliberalism's loyal opposition. Figures like Joseph Stiglitz or Paul Krugman, while critical of austerity and supportive of the welfare state, accept the fundamental neoclassical economic precepts at the heart of neoliberal policy. Mirowski argues that we must ditch this tradition in its entirety. Even attempts to render its assumptions more realistic -- as in the case of behavioral economics, for example, which takes account of the ways real people diverge from the hyperrationality of homo economicus -- provide little succor for those seeking to overturn the neoliberals. ..."
"... Mirowski's insistence on the centrality of the state to the neoliberal project helps correct the unfortunate tendency of many leftists over the past decade to assent to neoliberal nostrums about the obsolescence of the state. Indeed, Mirowski goes further than many other critics who have challenged the supposed retreat of the state under neoliberalism. ..."
"... Loïc Wacquant, for instance, has described the "centaur state" of neoliberalism, in which a humanist liberalism reigns for the upper classes, while the lower classes face the punitive state apparatus in all its bestiality. ..."
"... Mirowski shows us that the world of the rich under neoliberalism in no way corresponds to the laissez-faire of classical liberalism. The state does not so much leave the rich alone as actively work to reshape the world in their interests, helping to create markets for the derivatives and securities that made (and then destroyed) so many of the fortunes of the recent past. The neoliberal state is an eminently interventionist one, and those mistaking it for the austere nightwatchman of libertarian utopianism have little hope of combating it. ..."
"... Mirowski's concern to disabuse his readers of the notion that the wing of neoliberal doctrine disseminated by neoclassical economists could ever be reformed produces some of the best sections of the book. His portrait of an economics profession in haggard disarray in the aftermath of the crisis is both comic and tragic, as the amusement value of the buffoonery on display diminishes quickly when one realizes the prestige still accorded to these figures. Reading his comprehensive examination of the discipline's response to the crisis, one is reminded of Freud's famous broken kettle. The professional economists' account of their role in the crisis went something like (a) there was no bubble and (b) bubbles are impossible to predict but (c) we knew it was a bubble all along. ..."
"... Though Krugman and Stiglitz have attacked concepts like the efficient markets hypothesis (which holds that prices in a competitive financial market reflect all relevant economic information), Mirowski argues that their attempt to do so while retaining the basic theoretical architecture of neoclassicism has rendered them doubly ineffective. ..."
"... First, their adoption of the battery of assumptions that accompany most neoclassical theorizing -- about representative agents, treating information like any other commodity, and so on -- make it nearly impossible to conclusively rebut arguments like the efficient markets hypothesis. ..."
Oct 01, 2017 | www.jacobinmag.com

To understand how a body of thought became an era of capitalism requires more than intellectual history.

"What is going to come after neoliberalism?" It was the question on many radicals' lips, present writer included, after the financial crisis hit in 2008. Though few were so sanguine about our prospects as to repeat the suicidal optimism of previous radical movements ("After Hitler, Our Turn!"), the feeling of the day was that the era of unfettered marketization was coming to a close. A new period of what was loosely referred to as Keynesianism would be the inevitable result of a crisis caused by markets run amok.

Five years later, little has changed. What comes after neoliberalism? More neoliberalism, apparently. The prospects for a revived Left capable of confronting it appear grim.

Enter Philip Mirowski's Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown . Mirowski maintains that the true nature of neoliberalism has gone unrecognized by its would-be critics, allowing the doctrine to flourish even in conditions, such as a massive financial crisis, that would seem to be inimical to its survival. Leftists keep busy tilting at the windmill of deregulation as the giants of neoliberalism go on pillaging unmolested.

Mirowski identifies three basic aspects of neoliberalism that the Left has failed to understand: the movement's intellectual history, the way it has transformed everyday life, and what constitutes opposition to it. Until we come to terms with them, Mirowski suggests, right-wing movements such as the Tea Party (a prominent player in the book) will continue to reign triumphant.

The book begins with the war of ideas -- a conflict in which, Mirowski argues, the Left has been far too generous in taking neoliberals at their word, or at least their best-publicized word. We have, in effect, been suckered by kindly old Milton Friedman telling us how much better off we'd all be if the government simply left us "free to choose." But neoliberals have at times been forthright about their appreciation for the uses of state power. Markets, after all, do not simply create themselves. Joining a long line of thinkers, most famously Karl Polanyi, Mirowski insists that a key error of the Left has been its failure to see that markets are always embedded in other social institutions. Neoliberals, by contrast, grasp this point with both hands -- and therefore seek to reshape all of the institutions of society, including and especially the state, to promote markets. Neoliberal ascendancy has meant not the retreat of the state so much as its remaking.

If Mirowski is often acidic about the Left's failure to understand this point, he also recognizes that the neoliberals themselves have been canny about keeping the real nature of their project hidden through a variety of means. Neoliberal institutions tend to have what he calls a "Russian doll" structure, with the most central ones well hidden from public eyes. Mirowski coins an ironic expression, "the Neoliberal Thought Collective," for the innermost entities that formulate the movement's doctrine. The venerable Mont Pelerin Society is an NTC institution. Its ideas are frequently disseminated through venues which, formally at least, are unconnected to the center, such as academic economics departments. Thus, neoclassical economists spread the gospel of the free market while the grand project of remaking the state falls to others.

At the same time as neoliberal commonsense trickles down from above, Mirowski argues that it also wells up from below, reinforced by our daily patterns of life. Social networking sites like Facebook encourage people to view themselves as perpetual cultural entrepreneurs, striving to offer a newer and better version of themselves to the world. Sites like LinkedIn prod their users to present themselves as a fungible basket of skills, adjustable to the needs of any employer, without any essential characteristics beyond a requisite subservience. Classical liberalism always assumes the coherent individual self as its basic unit. Neoliberalism, by contrast, sees people as little more than variable bundles of human capital, with no permanent interests or even attributes that cannot be remade through the market. For Mirowski, the proliferation of these forms of everyday neoliberalism constitute a "major reason the neoliberals have emerged from the crisis triumphant."

Finally, Mirowski argues that the Left has too often been sucked in by neoliberalism's loyal opposition. Figures like Joseph Stiglitz or Paul Krugman, while critical of austerity and supportive of the welfare state, accept the fundamental neoclassical economic precepts at the heart of neoliberal policy. Mirowski argues that we must ditch this tradition in its entirety. Even attempts to render its assumptions more realistic -- as in the case of behavioral economics, for example, which takes account of the ways real people diverge from the hyperrationality of homo economicus -- provide little succor for those seeking to overturn the neoliberals.

For Mirowski, these three failures of the Left go a long way toward explaining how neoliberals have largely escaped blame for a crisis they created. The Left persistently goes after phantoms like deregulation or smaller government, which neoliberals easily parry by pointing out that the regulatory apparatus has never been bigger. At the same time, we ignore the deep roots of neoliberal ideology in everyday life, deceiving ourselves as to the scale of the task in front of us.

Whatever criticisms of Mirowski's analysis are in order, much of it is compelling, particularly in regard to the intellectual history of the NTC. Mirowski's insistence on the centrality of the state to the neoliberal project helps correct the unfortunate tendency of many leftists over the past decade to assent to neoliberal nostrums about the obsolescence of the state. Indeed, Mirowski goes further than many other critics who have challenged the supposed retreat of the state under neoliberalism.

Loïc Wacquant, for instance, has described the "centaur state" of neoliberalism, in which a humanist liberalism reigns for the upper classes, while the lower classes face the punitive state apparatus in all its bestiality. But Mirowski shows us that the world of the rich under neoliberalism in no way corresponds to the laissez-faire of classical liberalism. The state does not so much leave the rich alone as actively work to reshape the world in their interests, helping to create markets for the derivatives and securities that made (and then destroyed) so many of the fortunes of the recent past. The neoliberal state is an eminently interventionist one, and those mistaking it for the austere nightwatchman of libertarian utopianism have little hope of combating it.

It's here that we begin to see the strategic genius of neoliberal infrastructure, with its teams of college economics professors teaching the wondrous efficacy of supply and demand on the one hand, and the think tanks and policy shops engaged in the relentless pursuit of state power on the other. The Left too often sees inconsistency where in fact there is a division of labor.

Mirowski's concern to disabuse his readers of the notion that the wing of neoliberal doctrine disseminated by neoclassical economists could ever be reformed produces some of the best sections of the book. His portrait of an economics profession in haggard disarray in the aftermath of the crisis is both comic and tragic, as the amusement value of the buffoonery on display diminishes quickly when one realizes the prestige still accorded to these figures. Reading his comprehensive examination of the discipline's response to the crisis, one is reminded of Freud's famous broken kettle. The professional economists' account of their role in the crisis went something like (a) there was no bubble and (b) bubbles are impossible to predict but (c) we knew it was a bubble all along.

Incoherence notwithstanding, however, little in the discipline has changed in the wake of the crisis. Mirowski thinks that this is at least in part a result of the impotence of the loyal opposition -- those economists such as Joseph Stiglitz or Paul Krugman who attempt to oppose the more viciously neoliberal articulations of economic theory from within the camp of neoclassical economics. Though Krugman and Stiglitz have attacked concepts like the efficient markets hypothesis (which holds that prices in a competitive financial market reflect all relevant economic information), Mirowski argues that their attempt to do so while retaining the basic theoretical architecture of neoclassicism has rendered them doubly ineffective.

First, their adoption of the battery of assumptions that accompany most neoclassical theorizing -- about representative agents, treating information like any other commodity, and so on -- make it nearly impossible to conclusively rebut arguments like the efficient markets hypothesis. Instead, they end up tinkering with it, introducing a nuance here or a qualification there. This tinkering causes their arguments to be more or less ignored in neoclassical pedagogy, as economists more favorably inclined toward hard neoliberal arguments can easily ignore such revisions and hold that the basic thrust of the theory is still correct. Stiglitz's and Krugman's arguments, while receiving circulation through the popular press, utterly fail to transform the discipline.

Mirowski also heaps scorn on the suggestion, sometimes made in leftist circles, that the problem at the heart of neoclassical economics is its assumption of a hyperrational homo economicus , relentlessly comparing equilibrium states and maximizing utility. Though such a revision may be appealing to a certain radical romanticism, Mirowski shows that a good deal of work going on under the label of behavioral economics has performed just this revision, and has come up with results that don't differ substantively from those of the mainstream. The main problem with neoclassicism isn't its theory of the human agent but rather its the theory of the market -- which is precisely what behavioral economics isn't interested in contesting.

In all, Mirowski's indictment of the state of economic theory and its imbrication with the neoliberal project is devastating. Unfortunately, he proves much less successful in explaining why things have turned out as they have. The book ascribes tremendous power to the Neoliberal Thought Collective, which somehow manages to do everything from controlling the economics profession to reshaping the state to forging a new sense of the human self. The reader is left wondering how the NTC came to acquire such power. This leads to the book's central flaw: a lack of any theory of the structure of modern capitalism. Indeed, the NTC seems to operate in something of a vacuum, without ever confronting other institutions or groups, such as the state or popular movements, with interests and agendas of their own.

To be fair, Mirowski does offer an explanation for the failure of popular movements to challenge neoliberalism, largely through his account of "everyday" neoliberalism. At its strongest, the book identifies important strategic failures, such as Occupy's embrace of "a mimicry of media technologies as opposed to concerted political mobilization." However, Mirowski extends the argument well beyond a specific failure of the Occupy movement to propose a general thesis that developments like Facebook and reality TV have transmitted neoliberal ideology to people who have never read Friedman and Hayek. In claiming that this embodied or embedded ideology plays an important role in the failure of the Left, he places far more explanatory weight on the concept of everyday neoliberalism than it is capable of bearing.

At the simplest level, it's just not clear that everyday neoliberalism constitutes the kind of block to political action that Mirowski thinks it does. No doubt, many people reading this article right now simultaneously have another browser tab open to monster.com or LinkedIn, where they are striving to present themselves as a fungible basket of skills to any employer that will have them. In this economy, everyone has to hustle, and that means using all available means. That many of these same readers have probably also done things like organize against foreclosures should give pause to any blurring of the distinction between using various media technologies and embracing the ideology Mirowski sees embodied in them.

Indeed, the ubiquity of participation in such technologies by people who support, oppose, or are apathetic about neoliberalism points to a larger phenomenon on which Mirowski is silent: the labor market. Put bluntly, it is difficult to imagine anyone engaging in the painfully strained self-advertisement facilitated by LinkedIn in a labor market with, say, 2-percent unemployment. In such a market, in which employers were competing for comparatively scarce workers, there would be very little need for those workers to go through the self-abasing ritual of converting themselves into fungible baskets of skills. In our current situation, by contrast, where secure and remunerative employment is comparatively scarce, it is no surprise that people turn to whatever technologies are available to attempt to sell themselves. As Joan Robinson put it, the only thing worse than being exploited by capitalism is not being exploited by it.

In evaluating the role of everyday neoliberalism, it is also helpful to move, for the moment, beyond the perspective of the United States, where the NTC has clearly had great success, and adopt that of countries where resistance is significantly more developed, such as Venezuela or South Africa. Especially in the former, popular movements have been notably successful in combating neoliberal efforts to take over the state and reshape the economy, and have instead pushed the country in the opposite direction. Is it really plausible that a main reason for this difference is that everyday neoliberalism is more intense in the United States? I doubt it. For one thing, the strength of Venezuela's radical movements, in comparison with the US, clearly antedates the developments (social media, Here Comes Honey Boo Boo , and so on) that Mirowski discusses.

Moreover, it is just as plausible that the entrepreneurial culture he describes is even more extensive in the slums of the global South, where neoliberal devastation has forced many poor households to rely on at least one family member engaging in semi-legal arbitrage in goods salvaged from garbage or made at home. Surely such activities provide a firmer foundation for commercial subjectivity than having a 401(k). That resistance has grown in such circumstances suggests that looking to malignant subjectivities to explain popular passivity is an analytic dead-end.

If everyday neoliberalism doesn't explain the comparative weakness of the US left, what does? This is, of course, the key question, and I can do no more than gesture at an answer here. But I would suggest that the specific histories of the institutions of the American left, from the Communist Party to Students for a Democratic Society to labor unions, and the histories of the situations they confronted, provide us with a more solid foundation for understanding our current weakness than the hegemony of neoliberal culture does. Moreover, with a theory of capitalism that emphasizes the way the structure of the system makes it both necessary and very difficult for most people to organize to advance their interests, it becomes very easy to explain the persistence of a low level of popular mobilization against neoliberalism in the context of a weakened left.

If Mirowski's account doesn't give us a good basis for explaining why popular resistance has been so lacking in the US, it nonetheless suggests why he is so concerned with explaining the supposed dominance of neoliberal ideology among the general population. From the beginning, he raises the specter of right-wing resurgence, whether in the form of Scott Walker surviving the recall campaign in Wisconsin, the Tea Party mania of 2010, or the success of right-wing parties in Europe. However, much of this seems overstated, especially from a contemporary perspective. The Tea Party has, for all intents and purposes, disappeared from the front lines of American politics, and the Republican Party, while capable of enacting all kinds of sadistic policies on the state level, has remained in a state of disarray on the national level since the 2006 congressional elections.

More fundamentally, the argument that the voting public embraces neoliberalism doesn't square well with recent research by political scientists like Larry Bartels and Martin Gilens emphasizing the profound disconnect between the policy preferences of the poor and what transpires in Washington. What appears to be happening is less the general populace's incorporation into neoliberalism than their exclusion from any institutions that would allow them to change it. Importantly, this alternative explanation does not rely on the Left conceit that rebellion lurks perpetually just below the placid social surface, ready to explode into radical insurgency at any moment. It simply contends that the political passivity of neoliberalism's victims reflects a real diminution of their political options.

Mirowski's failure to address these larger institutional and structural dynamics vitiates much of the explanatory power of his book. On a purely descriptive level, the sections on the intellectual history of neoliberalism and the non-crisis of neoclassical economics illuminate many of the hidden corners of neoliberal ideology. However, if Mirowski is right to suggest that we need to understand neoliberalism better to be successful in fighting it -- and he surely is -- then much more is needed to explain neoliberal success and Left failure.

To understand how a body of thought became an era of capitalism requires more than intellectual history. It demands an account of how capitalism actually works in the period in question, and how the ideas of a small group of intellectuals came to be the policy preferences of the rich. Mirowski has given us an excellent foundation for understanding the doctrine, but it will remain for others to explain its actual development.

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[Oct 01, 2017] After Neoliberalism Empire, Social Democracy, or Socialism by Minqi Li

Collapse is indeed very slow as in 2017, or 13 years after the article was written neoliberalism remains dominant social system on the globe. Brexit and Trump victory were the only two major "confidence diminishing" events after the crisis of 2008.
Notable quotes:
"... A neoliberal regime typically includes monetarist policies to lower inflation and maintain fiscal balance (often achieved by reducing public expenditures and raising the interest rate), "flexible" labor markets (meaning removing labor market regulations and cutting social welfare), trade and financial liberalization, and privatization. These policies are an attack by the global ruling elites (primarily finance capital of the leading capitalist states) on the working people of the world. Under neoliberal capitalism, decades of social progress and developmental efforts have been reversed. Global inequality in income and wealth has reached unprecedented levels. In much of the world, working people have suffered pauperization. Entire countries have been reduced to misery. ..."
"... Human Development Report ..."
"... In many countries, working people have suffered an absolute decline in living standards. In the United States, the real weekly earnings of production and nonsupervisory workers (in 1992 dollars) fell from $315 in 1973 to $264 in 1989. After a decade of economic expansion, it reached $271 in 1999, which remained lower than the average real wage in 1962. In Latin America, a continent that has suffered from neoliberal restructuring since the 1970s, about 200 million people, or 46 percent of the population, live in poverty. Between 1980 and the early 1990s (1991–1994), real wages fell by 14 percent in Argentina, 21 percent in Uruguay, 53 percent in Venezuela, 68 percent in Ecuador, and 73 percent in Bolivia. 2 ..."
"... Under neoliberalism, governments have mostly pursued tight fiscal and monetary policies, restraining public spending. With liberalized financial markets, governments that run fiscal deficits are likely to be "punished" by private investors who may respond with capital flight and attacks on the currency. Therefore, governments (especially the governments of peripheral and semiperipheral countries) are under strong pressures to maintain fiscal balance by cutting expenditures. All neoliberal regimes seek to limit government expenditure. To summarize, in the neoliberal era, all three components of global effective demand are subject to strong downward pressures and have tended to either contract or stagnate. ..."
"... If the U.S. dollar is not going to depreciate against any other currency, why does the current account deficit have to be corrected? If the rest of the world's central banks keep intervening, flooding the world with their own currencies (euros, Japanese yens, and the Chinese renminbi) to prevent dollar depreciation, why cannot the United States run an ever-larger current account deficit for an indefinite period of time? It cannot go on indefinitely because the rising U.S. current account deficits absorb a growing proportion of the global saving. A theoretical limit will be reached when the entire world's saving is exhausted to finance the U.S. current account deficit. But the practical limit will be reached long before the theoretical limit. This course would raise U.S. and Japanese government debt to astronomical levels. These gigantic government debts would exist along with enormous household and corporate debts in the United States and Europe. ..."
"... To contain the explosion in the U.S. current account deficit, imports need to be reduced. One way is to reduce such key imports as motor vehicles and electronic goods by increasing their cost in U.S. dollars through a revaluation of the yen and the renminbi. This can only be achieved by political pressure, and it is being applied. Other substantial imports, such as clothing and footwear, cannot be reduced in quantity since U.S. producers no longer exist to supply the amount needed. Here costs can be contained by the relentless imposition of a "race to the bottom" -- the continual transfer of production to ever poorer and more desperate countries. Here some military force works wonders in enforcing neoliberal immiseration; consider the results of U.S. intervention in Nicaragua and Africa. But the key import is mineral fuels, and here the long-term cost can only be contained by U.S. control of the physical resources. The hand on the spigot that regulates production (and therefore price) must be controlled by the United States. This is one aspect of the economic benefits of U.S. global political power sought through military strength. ..."
"... But how can this imperialist project be financed? The costs of U.S. military expansion are likely to aggravate rather than alleviate the U.S. economic crisis. Stephen Roach of Morgan Stanley asks the question: "Can a saving-short US economy continue to finance an ever-widening expansion of its military superiority?" His answer is: "The confluence of history, geopolitics, and economics leaves me more convinced than ever that a US-centric world is on an unsustainable path." 12 ..."
"... Whatever the economic "costs" or "benefits," U.S. imperialism is losing the political and ideological battle. According to the latest survey of the Pew Global Attitudes Project (based in Washington), "America's image around the world has taken a sharp turn for the worse." 14 The project of a U.S. global neoliberal empire based on force has ..."
Jan 01, 2004 | monthlyreview.org

Topics: Economic Theory , Political Economy , Stagnation

The author has benefited from discussions with David Kotz, Robert Pollin, James Crotty, Gerald Epstein, Leo Panitch, Gregory Albo, Samuel Gindin, and Patrick Bond.

Since the early 1980s, the leading capitalist states in North America and Western Europe have pursued neoliberal policies and institutional changes. The peripheral and semiperipheral states in Latin America, Africa, Asia, and Eastern Europe, under the pressure of the leading capitalist states (primarily the United States) and international monetary institutions (IMF and the World Bank), have adopted "structural adjustments," "shock therapies," or "economic reforms," to restructure their economies in accordance with the requirements of neoliberal economics.

A neoliberal regime typically includes monetarist policies to lower inflation and maintain fiscal