Home > Economics - General > After neoliberalism: a snippet

After neoliberalism: a snippet

August 30th, 2016

Over the fold, some concluding comments from a chapter I’ve written about the rise and decline of neoliberalism. I’m drawing on the “three-party system” analysis I’ve put forward before, in which neoliberalism (in both ‘hard’ and ‘soft’ forms) is increasingly breaking down under pressure from tribalists on the right, and from an amorphous, but still resurgent left.

This is just a snippet, which I hope will evolve into a more extensive discussion of the policies and political strategies the left should adopt in response to the breakdown of the neoliberal order.

The failure of neoliberalism poses both challenges and opportunities for the left. The greatest challenge is the need to confront rightwing tribalism as a powerful political force in itself, rather than as a source of political support for hard neoliberalism. Given the dangers posed by tribalism this is an urgent task. One part of this task is that of articulating an explanation of the failure of neoliberalism and explaining why the simplistic policy responses of tribalist politicians will do nothing to resolve the problems. The other is to appeal to the positive elements of the appeal of tribalism, such as solidarity and affection for long-standing institutions and to counterpose them to the self-seeking individualism central to neoliberalism, particularly in the hard version with which political tribalism has long been aligned.

The great opportunity is to present a progressive alternative to the accommodations of soft neoliberalism. The core of such an alternative must be a revival of the egalitarian and activist politics of the postwar social democratic moment, updated to take account of the radically different technological and social structures of the 21st century. In technological terms, the most important development is undoubtedly the rise of the Internet. Thinking about the relationship between the Internet economy and public policy remains embryonic at best. But as a massive public good created, in very large measure, by the public sector, the Internet ought to present opportunities for a radically remodeled progressive policy agenda.

In political terms, the breakdown of neoliberalism implies the need for a political realignment. This is now taking place on the right, as tribalists assert their dominance over hard neoliberals. The most promising strategy for the left is to achieve a similar shift in power within the centre-left coalition of leftists and soft neoliberals.

This might seem a hopeless task, but there are positive signs, notably in the United States. Although Hillary Clinton, an archetypal soft neoliberal, has won the Democratic nomination for the Presidency and seems likely to win, her policy proposals have been driven, in large measure by the need to compete with the progressive left. There is reason to hope that, whereas the first Clinton presidency symbolised the capture of the Democratic Party by soft neoliberalism, the second will symbolise the resurgence of social liberalism.

The era of unchallenged neoliberal dominance is clearly over. Hopefully, it will prove to have been a relatively brief interruption in a long term trend towards a more humane and egalitarian society. Whether that is true depends on the success of the left in putting forward a positive alternative.

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  1. J-D
    August 30th, 2016 at 15:59 | #1

    I don’t accept a positive evaluation of ‘affection for long-standing institutions’.

  2. Apocalypse
    August 30th, 2016 at 16:03 | #2

    The Internet is just a technology. It enables a whole lot of things, good and bad, but it’s not obvious why it should enable a progressive left agenda any more than any other political agenda.

  3. John Quiggin
    August 30th, 2016 at 16:17 | #3

    @1 Maybe I was bit cryptic there. I’ve added a link, and might edit the text

    @2 I’ve given a suggestion as to why it should, but obviously I need to spell it out a bit more.

  4. Apocalypse
    August 30th, 2016 at 16:47 | #4

    @John Quiggin

    Your suggestion is two things (a) that because the Internet was kick started with public money (in the United States, by the Pentagon, as a cold war project) and (b) because it has public good features, it is an inherently progressive technology.

    Well, maybe. But it’s easy to think, maybe not. The Internet facilitates a lot of things that are not remotely progressive, like making it easier for national security agencies to spy on people, making it harder for governments to tax rich people, expanding the influence of certain media moguls, and so on. So, as Senator Hanson is wont to say, please explain.

  5. Geoff Edwards
    August 30th, 2016 at 19:45 | #5

    1. The analysis must factor in the environmental crisis. As climate change and the collapse of life-support systems press themselves into policy consciousness, new alignments will arise to confound older ones. It is unclear whether the economic failures of neoliberalism will bring on its replacement by new order before the environmental failures do so.

    The “hard right” have set their face against environmentalism and this by itself is sufficient to bring about their undoing in due course, although a lot of damage to the planet can happen in the meantime.

    2. A sizeable chunk of the right-wing tribalists are inflamed by the loss of sovereignty and economic vigour through free trade, free foreign investment and international financial speculation. In this, the progressive left should have common cause. If only some political champion on the left could take up the cause of economic nationalism, they could undermine the more fascist and racist tendencies of the nationalists.

    It ought to be possible to argue that it is not migrants who are stealing Australian jobs, but a theory of trade that doesn’t work when applied across boundaries of nations with currencies of different value.

  6. paul walter
    August 30th, 2016 at 20:03 | #6

    Don’t know people are so picky about. The article made sense to me. In fact Coalition tribalism and its clash with neo liberalism is the defining characteristic here for several years now. Labor has its variation in the clash between progressives and social conservatives, which has lobotomised it.

  7. Jim Rose
    August 30th, 2016 at 20:22 | #7

    How are the antineoliberal parties going at the ballot box.

  8. Apocalypse
    August 30th, 2016 at 20:52 | #8

    @Jim Rose

    Patience, grasshopper.

  9. I am and will always be Not Trampis
    August 30th, 2016 at 21:29 | #9

    Neo-liberalism has failed?

  10. Jordan from Croatia
    August 30th, 2016 at 23:17 | #10

    J.Q.
    Progressive alternative is constantly being offered, yet the biggest resistance commes from academic economists.
    Academic economists still preffer soft neoliberal DSGE, or, would you like to call it tribalism.

    Job Guarantee coupled with Basic Income Guarantee is an obvious choice in environent of increasing automatisation.
    I would also advocate the return of 90% marginal tax (which is not the part of MMT recomendation), monetary policy to be wage growth target and giving points to credit score of lower income aplicants.
    But it seems that academics do not want to end up like Steve Keen; without a job, so they recomend NGDP targeting because it is soft neoliberalizm and worse then present policy. So, do not rock the boat and loose your job.

    And btw, neo-liberalism is failing?

  11. James Wimberley
    August 31st, 2016 at 03:17 | #11

    Cross-commented at CT
    *******************
    “But as a massive public good created, in very large measure, by the public sector ..” With a large assist from non-profit-making community movements, as with Wikipedia and Linux. (IIRC the majority of Internet servers run on variants of the noncommercial Linux operating system, as do almost all smartphones and tablets.) CT, with unpaid bloggers and commenters, is part of a much bigger trend. Maybe one lesson for the state-oriented left is to take communitarianism more seriously.

    The Internet, with minimal state regulation after the vital initial pump-priming, technical self-government by a meritocratic cooptative technocracy, an oligopolistic commercial physical substructure, and large volumes of non-commercial as well as commercial content, is an interesting paradigm of coexistence for the future. Of course there are three-way tensions and ongoing battles, but it’s still working.

  12. richclayton3
    August 31st, 2016 at 03:59 | #12

    @Jordan from Croatia Not sure why you think a Universal Basic Income and a Guaranteed Job Program would be something academic economists would be afraid to support. Tony Atkinson, for instance, supports both quite clearly in his book “Inequality: What Can Be Done”, and each proposal (especially the UBI) seems to be winning more academic proponents each day, at least in the US.

  13. Greg McKenzie
    August 31st, 2016 at 08:26 | #13

    If you read Thomas Piketty’s book .Capital in the twenty-first century You will get some support for John’s plan to wean politicians off soft liberalism.

  14. Ikonoclast
    August 31st, 2016 at 08:32 | #14

    I would like to suggest that people reading this thread read two papers. I guess I will have to use two posts to link to these two papers.

    The first paper is quite short. It is “Neoliberalism: The Highest Stage?” by Michel Husson

    http://hussonet.free.fr/actumx11e.pdf

  15. Ikonoclast
    August 31st, 2016 at 08:42 | #15

    Further to my post above, I suggest people read this longer paper from 2005. It is very prescient considering it was written before the GFC. It is a longer paper.

    “Neoliberalism, Global Imbalances, and Stages of Capitalist Development” – Minqi Li, Andong Zhu

    http://scholarworks.umass.edu/cgi/viewcontent.cgi?article=1087&context=peri_workingpapers

    If people read these papers seriously, I think they will come to understand that any proffered analysis of the world system on the basis of surface political analysis without thorough political economy analysis, is inadequate to understand what is afoot.

    I have more to say perhaps but lack time at the moment to post fully.

  16. Ernestine Gross
    August 31st, 2016 at 09:22 | #16

    @Jordan from Croatia

    “But it seems that academics do not want to end up like Steve Keen;”

    To the best of my knowledge, your information is very outdated. For about 2 years, Steve is Professor and Head of the Department (or School) of Economics, History and Politics at Kingston University in London.

  17. GrueBleen
    August 31st, 2016 at 10:31 | #17

    @Ikonoclast
    Your #14, 31 Aug

    Did I say I know what you are doing, Ikono ? I do believe I did, and do, and this is just one of many examples. Education, first of self, then of others. And how do I know this ? Because I once sought to do the same.

    But inertia, mate, inertia. Socially, it is massive – however, just maybe, also in an unstable (Nash ?) equilibrium so that a small disturbance may send it crashing down into a new state. And hopefully, a better state – where the meaning of “better” is as defined by you. The robber barons (and grifters, grafters, conmen, thieves, murderers and mutilators) may have a different view.

    So, what we have is a program which, recognising the vanishingly small likelihood thereof, isn’t about starting the one revolution that is so great we’ll never have to have another, but with band-aiding ‘capitalism’ to ameliorate its worst excesses and failings.

    So it goes. And when in the paper you’ve linked tp I encountered this statement in what appears to be a short abstract up the front: “The decline of neoliberalism may pave the way for a new set of economic, political, and social institutions.”, I knew we had vintage Ikono. 🙂

    So, it’s been 11 years since 2005 (year of the paper). Have we observed the beginnings of any of those new “economic, political, and social institutions” yet ?

  18. Ikonoclast
    August 31st, 2016 at 12:06 | #18

    @GrueBleen

    “So, it’s been 11 years since 2005 (year of the paper). Have we observed the beginnings of any of those new “economic, political, and social institutions” yet ?” – GrueBleen.

    No, we haven’t. And that is really what I am saying in relation to J.Q.’s “green shoots” and “back to the future” social democratic theorising. These are my gently critical (and borrowed) terms for J.Q.’s points. He sees green shoots of hope in the neoliberal consensus breaking up. The neoliberal consensus is not breaking up among the elite at all and they are still in complete charge. On the other side, the uneducated rednecks and complacent still-large-but-declining remnants of the Western middle class still don’t understand what is happening at all. Hence my obsession with self-education and then other-education in terms and with theories which I think actually give some purchase on understanding the current state of affairs and the (coming) crisis. It’s my opinion and J.Q. will disagree with my opinion of course. I hope I will be permitted to continue to express a dissenting opinion if I am polite about it. It was my past lack of politeness and respect for our host which has been a problem I think, not my dissenting opinion as such.

    In the middle of the above groups (the neoliberal elites and our politically uneducated classes) are our mainstream Western intellectuals or intelligentsia. They see through neoliberalism but not through capitalism as such, IMO. Capitalism to them is still a completely naturalised and normalised phenomenon. It’s not, to them, capitalism (a variant of political economy) but simply economics.

    With respect to the “back to the future” hopes, I would argue that the idea that we can return to something like Keynesian Welfarism under a broadly capitalist political economy and that everything will thus be resolved or at least lead to “a long term trend towards a more humane and egalitarian society” is a misguided idea (again IMO). It’s worth looking at J.Q.’s full final paragraph.

    “The era of unchallenged neoliberal dominance is clearly over. Hopefully, it will prove to have been a relatively brief interruption in a long term trend towards a more humane and egalitarian society. Whether that is true depends on the success of the left in putting forward a positive alternative.”

    Even ignoring previous phases of capitalism like “Imperialism” and “Keynesian-Fordism”, it is clear that the neoliberal capitalist game as a specific variant of capitalism, was and is clearly a rigged game. It rapidly (in historical terms) transfers wealth from workers to a small elite of wealthy owners and reverses institutions of public ownership, social wages and welfarism. In practice, it has rapidly increased levels of inequality. The facts are in on this. I could name any number of reputable economists who have demonstrated the case in various ways (empirical data and theory explicating the data) but mentioning Piketty and Stiglitz should do.

    Maybe we can use an analogy to explore this. If a game is rigged in a manner that the rube initially does not realise, then the rube will be treated with shows of amity and hospitality while he is at the table losing money. He will get apparently free drinks and free food while paying for them with long term losses at the table. Let the rube run out of money to lose and he will be unceremoniously tossed outside in the gutter beside the trash cans. Alternatively, let the rube twig to the fact that the game is rigged and rise to his feet and start accusations about rigging. The show of amity and hospitality evaporates instantly. Immediately things turn nasty, very nasty. Neoliberalism, or rather its agents, are not going to say “OK, you have twigged the game is rigged, now we gave back all your money and treat you fairly in future.” That aint going to happen. What really happens is, in the case the neoliberals will get get very nasty very quickly. A long and vicious reaction to being called out on inequality is yet to happen. We aint seen nothing yet. Are we ready for it?

  19. Martin W
    August 31st, 2016 at 12:17 | #19

    @Ikonoclast #13, 14
    I’ve been pretty much a daily reader here for a year or 3, very occasional modest commenter. I think Ikono you have perhaps just posted up the best contribution I have read in many a long while, Thanks.
    “The brutal reestablishment of profit leads to a block on
    growth, which could become a new recession and make profits fall again.
    This is the first dilemma facing capitalism today. It is less spectacular than
    the debt crisis, but it is the foundation on which it develops.”
    NEOLIBERALISM:
    THE HIGHEST STAGE?
    Michel HUSSON

    So here we are, interest rates nearing bottom end, wages growth negative, household debt at all time highs, increasingly large numbers of ‘working poor’, Govt. fiscal imbalance now critical…….. and yet…….our Parliaments cant even rule on a basic ethical issue of gender bias.

  20. I am and will always be Not Trampis
    August 31st, 2016 at 13:11 | #20

    neo-liberalism hasn’t failed . Classical economics has failed

  21. Ikonoclast
    August 31st, 2016 at 14:50 | #21

    Referring to Michel Husson’s article as an example, this kind of whole of system analysis, of capitalism, over historical time, for the entire capitalist era, by and large only occurs in Marxian scholarship, so far as I know. I am open to being given counter-examples but classical (and neo-classical) economics seems bereft of this kind on analysis except for the incomplete examples of Keynes and Piketty. Keynes attempted a kind of systems analysis, limited in scope, and Piketty made a descriptive study of historical trends without any systematic theorising beyond pointing out the obvious (but only obvious once uncovered) implications of r GT g.

    Thus most standard economic scholarship can see only a political crisis within modern economics in praxis which it often won’t even call “capitalism”; that is to say, in our contemporary crisis example, neoliberalism is constructed as a “mere” social democratic aberration or failure but not as any kind of crisis or fault inherent in the model of capitalism itself. I, as a Marxian of sorts, obviously find the fault in the issue of the ownership, and thus the control, of the productive apparatus itself. When a minority own and control most of the productive apparatus and the conduits which channel distribution (or “pre-distribution “depending on terminology) of wages and profits then these apparatuses and conduits will be used, ipso facto, predominantly for minority benefit.

    Ownership IS control. This is what “ownership” means in practice. The owner is the one who predominantly controls what is produced, to whom the proceeds are distributed and who suffers or pays most for negative externalities. Clearly, there are multiple parties fighting for portions and aspects of control. Different capitals and capitalists compete. Wage earners also compete, using different methods and implements, and fight for wages and conditions. Workers fight to extract some concessions from capital (better wages or conditions) which process in itself essentially demonstrates the case that the primary ownership and control belongs to the capitalist under this system and the fruits can only subsequently and secondarily be wrested partially from the capitalist.

    The extent to which our social democracy modifies the outcomes of capital, this then is the extent to which people with no direct control of production (as owners) can implement some indirect control secondarily and at one remove via the social democratic apparatus. This is the crux of it. If you fight for slices after the bread is sliced, you are in the subservient, secondary and dependent position. It is not your system. You survive in it on sufferance. As the system follows its logic, as it had done in the neoliberal era, your slices turn into crumbs. The proof is in the ongoing results of neoliberalism as this latest, highest stage of capitalism so far. There is no guarantee that this is the final, highest stage of capitalism. Worse could be yet to come and is likely to come if the system is not fundamentally changed.

  22. GrueBleen
    August 31st, 2016 at 15:49 | #22

    @James Wimberley
    Your #10

    Err, you have heard of Fidonet and Usenet and the dialup Bulletin Board System mail and Echo networks and DEC PDP machines with DEC Unix haven’t you, James ?

    Linux is post 1991 and even the WWW predates the first Linux by at least a year.

    Here’s a bit of info about Fidonet:
    “According to Odd de Presno, in June, 1993, there were 24,800 FidoNet sites around the world, serving an estimated 1.56 million users. In 1998, FidoNet had about 30,000 nodes world wide, and it remains a vibrant online community into the 21’st century.”

    And I know all about that having been a regular Fidonet/BBS user – especially in connection with an Australian echo named LTUAE (which ProfQ may have heard of from his brother).

    The web, internet, WWW are all johnny-cum-latelys, mate.

  23. GrueBleen
    August 31st, 2016 at 16:22 | #23

    @Ikonoclast
    Your #17

    A very long and involved response, Ikono. I was expecting something succinct along the lines of “Yeah, GrueBleen, you’ve worked me out completely !” Or thereabouts 🙂

    Actually, I had to say that I always thought the ‘neoliberal consensus’ was all about reintroducing feudalism without serfs – which is what the gig and part-time work systems are all about. The feudal lords, after all, even though their serfs were actually bonded slaves, still had a ‘noblesse oblige’ aspect of responsibility for, and to, their serfs.

    But nowadays, there’s none of that – and the only pro-worker agencies of former times – the trades unions – have been allowed to turn in on themselves, become staffed with Shorten style careerists (and Bill Kelty long before him), and basically corrupt themselves, sometimes very badly (as per the Health Services Union fiasco).

    But I see you have another longish post – your #20 – which is next on my reading list, so I guess I should get on with being educated.

  24. Jordan from Croatia
    August 31st, 2016 at 17:07 | #24

    @richclayton3
    I think that most of the economists are afraid of supporting JG and BIG is because they do not even discuss it. I follow two blogs daily that gather importand economic discussions and link to them. Economist’s View from mainstream and mikenormaneconomics that is obsessed by JG and BIG and surely links to such discussion or papers writen on it.
    Did paper on BIG and JG got a nobel? When it does i will change my mind.
    If anyone writes about JG and BIG it is from post-keynesian school since it is about radically affecting the system, so, mainstream is afraid of discussing it. Even tough JG and BIG are policies that were implemented, at some point in time and for some periods, and used by developed countries in some form of another, talking about it makes you a heterodox economist.

    Australia is using BIG, yet it is divided under numerous policies but the logic is that every citizen has some income no matter the name of the program thats providing them such income. If you unifiy it undrer BIG and remove the birocratic hussle to apply for it and them be approved, which requiers huge buirocracy and paperwork, state might even save some money.

    Many from the right are for BIG only since it reduces the “size of the state” (in buirocratic terms only) but are against JG since it enlarges the state. I would argue that both programs are necessery to work toghether to radically influence outcomes of the capitalism. Couple that with CBs calculating recomended levels of income in BIG and JG in order to target the growth and unemployment in private sector with social department calculating minimum of subsistence and you get the mechanism for reducing the inequality.
    Barely any economist would mention this set up as i described it talking about of importance of coupling JG and BIG to catch any abuse and dissallow anyone falling throught the cracks.

  25. Jordan from Croatia
    August 31st, 2016 at 17:08 | #25

    @Martin W
    I second that.

  26. James Wimberley
    August 31st, 2016 at 17:16 | #26

    @GrueBleen
    Thanks for conforming my point.

  27. Greg McKenzie
    September 1st, 2016 at 09:27 | #27

    Jordan from Croatia makes some very valid points! Today I read an article by Michael Spence
    Entitled “We are facing two secular stagnations, not just one.” It was very thought provoking
    And may interest Jordan from Croatia because Michael Spence is a Nobel laureate in economics. This Project syndicate Article could have a few answers.

  28. Julie Thomas
    September 1st, 2016 at 09:34 | #28

    @James Wimberley

    I can assure you that GrueBleen does not conform your point. 🙂

    Sorry for the snappy comment?

  29. James Wimberley
    September 1st, 2016 at 19:49 | #29

    @Julie Thomas
    Still no edit function for comments …

  30. Tom N.
    September 2nd, 2016 at 01:43 | #30

    @Ikonoclast

    The facts are in on this. I could name any number of reputable economists who have demonstrated the case in various ways (empirical data and theory explicating the data) but mentioning Piketty and Stiglitz should do.

    LOL

  31. Julie Thomas
    September 2nd, 2016 at 07:45 | #31

    @Tom N.

    “LOL”

    Now that’s a snappy comment. I am in awe of your ability to express your response in a way that resonates with intelligent people.

  32. GrueBleen
    September 2nd, 2016 at 08:14 | #32

    @James Wimberley
    Your #29

    So I get to keep my thoroughbred conformation.

  33. may
    September 5th, 2016 at 14:09 | #33

    I’m straining my puny brain, I really am.

    but.

    “productivity” seems to be the word of the moment.

    then we have a situation like live export of animals going gangbusters

    and there being only one (yes one) tannery left in OZ.

    how does that equate to productivity?

    as for a more humane and egalitarian society, it is and as far as I can see, always been the productive ones doing what they can in the face of implacable avarice to hold on to the results of their productivity.

    slow, against the odds and prone to despair.

    but.

    if there are more than one tannery and im’ wrong, that would be great.

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