WHAT ARE THE ALTERNATIVES TO NEOLIBERAL CAPITALISM?
By Joachim Hirsch
[This essay is translated abridged from the German on the Internet, http://links-netz.de.]
That this present crisis triggers some surprise is astonishing. Capitalism on account of its inner contradictions represents a crisis-ridden social system. Times of relative stability are followed by great breakdowns at periodic intervals that then usually lead to fundamental social revolutions. Therefore, capitalism takes new forms again and again – as concerning production processes, class relations and political institutions. Capitalist crises are never only “economic.” Rather, they are the result of very complex connected economic, political and ideological processes. Every historical formation of capitalism marked by a specific accumulation regime and a special kind of regulation has economic-political dynamics revealing the basic structural contradictions in a unique way. Each of these formations has its specific crisis processes. This is also true for the neoliberal post-Fordist capitalism carried out since the 1980s after the end of postwar Fordism and which is by no means the “end of history.”
A short glance back is necessary to understand the current crisis. The world economic crisis of the 1930s led to a decisive change of global capitalism. Previously, international power relations had shifted considerably in the wake of the Russian October Revolution. The age of the East-West system competition began. This was the crucial reason that capitalism seemed to have a more social or civilized face for a time in the wake of the crisis.
After Roosevelt’s New Deal in the US and the defeat of fascism in the Second World War, a gradual development of the social state occurred in Europe. Unions were accepted as political negotiating partners and gained strength. Corporatist negotiating mechanisms were established with the inclusion of “social partners,” that is unions and trade associations – in governmental, political, economic and social decision-making processes. Fordism based on full employment policy, mass production and mass consumption arose in the capitalist metropolises. This was only possible because the rulers were forced to several political and social concessions under the pressure of East-West system competition given the economic debacle with all its disastrous political consequences. The appearance that capitalism had reached its golden age characterized by constant economic growth and developed centers lasted a long while.
Fordism was only one variant of capitalism and was plunged in crisis. The Fordist “dream of perpetual prosperity” had a short lifespan. The second great crisis of the 20th century broke out in the 1970s. The rationalization possibilities of the Taylorist-Fordist work process began to wear out, the capital profits declined and the social achievements of the postwar time became a burden for capital. The Keynesian-welfare state regulatory mode came into contradiction with the ruling accumulation regime. The long-lasting growth progress characterizing the postwar era came to a standstill…
Neoliberal capitalism is based on a gigantic expanding debt bubble. This had to burst some time or other and happened in the fall of 2008. The profits flowed into an expanding bubble of financial speculation. This was possible through the state deregulation of the bank and financial sector. The growing state and private indebtedness in the US long supported the worldwide demand and the global economic cycle
The long-hidden over-accumulation crisis inherent in neoliberal capitalism was revealed in the form of drastic sales breakdowns. The economic debacle described as the financial crisis does not have its causes in an alleged independence of the financial world or in irresponsible actions of financial jugglers with criminal energy. Rather, the financialization of capitalism was the structural component of the neoliberal world economy and describes the specific manifestation of capitalist contradictions. The present world economic crisis has the dimensions of its predecessor in the first half of the 20th century. Capitalism assumes a very new form.
That is the only parallel. World-political power relations today are completely different after the collapse of state socialism and given the absolute military-economic dominance of the capitalist metropolises. The capital relation has become global, the system competition is ended and social concessions are no longer unconditionally necessary. The crisis can now be used very immediately to revitalize capital through further redistribution of the social wealth at the expense of the broad population. Why weren’t there mass protests in view of the unreasonable demands?
State regulation is on the agenda again after the neoliberal wonder drug “market” obviously failed completely. The previously repeated wisdom “The state was the problem and not the solution” is turned upside down. The state is suddenly regarded as the guarantor for economic stability and as a rescuer from crisis and no longer viewed as an obstacle by the official ideology for the beneficial unfolding of market forces. Political “re-regulation” is talked about everywhere again…State activity is exhausted in a gigantic capital revitalization program given the transformed social power relations…
Businesses responsible for the crisis – the financial corporations – were bailed out or subsidized in the billions. This was necessary to prevent the complete collapse of the economy. Therefore, it was in the general interest. Once made out to be a threat to freedom, prosperity and progress, politics and the state are sought again. The politicians who first made possible the disaster come on the scene as helpers in need. So the German chancellor like many of her colleagues seems to have simply forgotten her strict neoliberal program in the last Bundestag election. Strangely enough, the people still seem to trust her…
The party system represents everything but the interests of the population. The ruling democracy has decayed to a formality through the neoliberal transformation of political institutions. Governments act as the helpers or errand boys of capital. The more incapable the parties become in developing their social goals beyond the simple logic of capital exploitation, the more directly they become the helpers of capital… The central political decision-making processes have long left the representative democratic institutions. Established interests prevent the development of state investment programs that could really catch on. So, there are tax cuts for the rich instead of public investments in the social infrastructure. Helping the poorer and stimulating demand in the Keynesian sense is not allowed by the neoliberal catechism. The crisis leads to accelerating the monopolization process and further increases the linkage of capital and the state… The state becomes incapable of guaranteeing the long-term social reproduction conditions, the more it loses its relative independence to capital. The squabbling in climate policy is a good example. The question is whether there is an alternative to this development.
An alternative to the prevailing social conditions can hardly be discerned. This is an important reason for the lack of mass protests… Economic crises were always a poor foundation for emancipative changes. This is also true today.
What should be done? The existing social model obviously has no future economically, ecologically or socially. More is necessary than a re-regulation where the dominant conditions at best are stabilized… Historical experience shows the concrete form assumed by capitalism depends essentially on the international and inter-social conditions of power. Obviously profits must be made as long as conditions of capitalism continue. How high they are and under what conditions and for what purposes they are carried out cannot be fixed from the start.
“Neoliberals dared to think the inconceivable during the decades of Keynesian economic policy and then used a great crisis to carry out their program. The economist Friedrich Hayek inspired Ronald Reagan and Margaret Thatcher. The most important lesson that could be drawn from the success of the socialists is their courage for utopia” (Serge Halimi in Le Monde diplomatique, November 2008)…
A completely new orientation of the relations of public and private, politics and the economy is crucial. The market-friendly way of socialization pushed to the extreme by neoliberal politics must be retracted in some social sectors and replaced by a more social and more solidarity mode… The supply of public goods must be expanded; a social infrastructure in health care, education, culture, energy, housing and transportation should be built…
THE FAILURE OF LIBERALISM
Liberalism liberates capital from its chains – and faces its collapse today
Liberalism was the only remaining political system worldwide after the disintegration of the Soviet Union. With globalization, it entered its triumphant advance – and faces its collapse today. The elites are not capable of corrections. An analysis
By Gert Ewen Ungar
[This article published on 1/7/2019 is translated from the German on the Internet, https://de.rt.com/Ir6e.]
Liberalism is the only great social narrative still left after the tests of the 20th century. It was in a triumphant advance since the collapse of the Soviet Union. Under the term “globalization,” it forced the whole world in its framework. It showed very different facets on this triumphant advance around the globe. Little remains of its original claim of being a “natural” world order beyond all ideology that supposedly sets the freedom of the individual in the center.
The Dialectic of the Liberal World Order
“Liberalism” – as was increasingly clear in the last decades – is an economic order based on exploitation that stabilizes by splitting society into small groups in competition so a solidarity organization and opposition are impossible. The individual groups treat their distinction from the “rest” of society as individual freedom.
In addition, liberalism does not recognize the sovereignty of nation-states if they do not submit to the economic dictates of liberalism. The liberal world order claims the right to break international agreements and guidelines wherever it likes and to intervene even in wars of destruction. Liberalism holds to a post-historical universalism – a post-historical final score of human society.
This model strikes its limits more and more in its external frontiers. The increasing number of wars and conflicts are formally waged in the name of democracy and human rights but actually are for power, spheres of influence, resources and transportation routes. Wars waged by the West and the inflicted suffering have increased and not decreased. Liberalism fails in its own alleged moral values. It is an order based on the exercise of violence, oppression, violation of agreements, the breach of law and sovereignty of others and is not a free and peaceable order.
When the West celebrates the Universal Declaration of Human Rights from 70 years ago, this sounds like mockery and sheer cynicism in many regions of the world. No region of the world violates the basic ideas of human rights as vehemently and broadly as the West itself.
Since the 2008 financial crisis, the limits of liberalism have been increasingly visible in the core countries. The European Union as an alliance of states committed to liberalism
is impacted in particular. It threatens to collapse vertically and horizontally, horizontally with the disintegration of the European Union into nation states and vertically through the increasing splitting and squabbling of the social stratification. Poverty has returned to an alarming extent in the US with the promise of creating prosperity “for everyone.” Consciously uncounted homelessness, permanently high unemployment, precariousness of living conditions, collapse and reconstruction of social security systems and decline of the infrastructure are only several catchwords for the homemade problems of a neoliberal EU based on austerity.
Neoliberal Order Stands for Endless Wars and is the Cause for the EU’s Destruction
The central promise to the citizens of the EU was not fulfilled. The inability of liberal elites in Europe to explain the turning away of citizens from their liberal project is astonishing.
Foreign influences that simply came from nowhere according to the elites’ understanding
are assumed to be the causes of right-wing populism. Political or media connections between economic policy and social decay have not been analyzed.
With this incapacity for analysis, the EU is obviously not reformable on the political or media planes. An insight in this connection is crucial. Citizens turn away because they feel cheated when the promise of growing prosperity is not fulfilled or is even twisted round completely.
This is simple to understand… the whole structure – the EU and its nation states – is skidding to the right. This right-wing pull becomes more intense as the limits of the sayable become narrower and narrower. A strange individualized censorship and self-censorship is advancing. Exclusion and screening are the means for creating a little pipedream (Wolkenschlosser) where the liberal illusion can be maintained. Right-wing pressure becomes more aggressive outwardly
The representatives of liberalism see themselves threatened from the outside. The new right, Trump, Putin, China and a new authoritarianism are examples of this threat… A critical confrontation with one’s own basic assumptions is avoided. In liberalism, everything possible can be discussed – except for the central themes that are taboo for discussion. The discourse is narrowed.
Conflicts over the Future and a Multi-polar World Order
The economic order is a very central theme. All discussions about this theme are avoided. Discussion is nipped in the bud although an extensive confrontation with this question is indispensable. Who profits from the prosperity gained together? The past thirty years show the folly of leaving uncontrolled and uncontrollable actors to the “markets”!
Another thesis that is not widely discussed is the universalism of ideology… Other cou9ntries are recognized according to liberal criteria… Enormous cognitive dissonances are reproduced…
To the liberal elites, the real challenge s that face the EU – Brexit, the independence efforts of individual regions and the protests of the Yellow Vests – all these seem only generated by an intermeddling of dark, foreign powers, “probably” Russia.
For years, such intermeddling was presumed… The cause of the decay is internal. An economic ideology leading our society back to the injustice of pre-industrial times lies in totalitarianism… Despite great resistance and hurdles, Russia broke through the supposedly generally accepted model of liberalism. Putin did an about-face while obediently converting all the neoliberal proposals from the West. A growing middle class rising life experiences and developing the infrastructure are several examples for the success of a social policy. “The markets” should be embedded and controlled; life should not be left to “the markets.”
Fairytale Notions for the Mainstream
The distinction between the Western approach and the Russian Federation approach is clear in the Ukraine example. While the Ukraine is forced by neoliberal reforms buy the US, the IMF and the EU, prices climb and wages and pensions fall. Part of the population cannot afford heating costs adjusted the “common market prices.” Market-conforming schools and universities remain cold in the winter…
Joachim Hirsch, Markets as a Fetish,
Peter Koenig, Hope-Versus Neoliberlaism-An Ode to Solidarity, 2015
America inspired Europe and the world with its progressive taxation.
Thomas Piketty explains how Elizabeth Warren's wealth tax is American as apple pie
Last month, Democratic presidential hopeful Elizabeth Warren proposed an annual tax on the largest fortunes in America, with some of the cash generated by the tax being funneled into the IRS to catch dodgers who move or hide their money to escape the tax.
The Warren proposal was modelled on the work of French economist Thomas Piketty, who set out the case for a global wealth tax as an engine for economic growth and political stability in his blockbuster Capital in the 21st Century.
Now, Piketty has published an editorial endorsing Warren's proposal and connecting it to the history of US tax policy, arguing (with data to support his position) that historic tax rates -- which were much higher than they are now -- were the key to US growth and avoiding the malaise, instability and horrific wars that rocked Europe for a century.
He says that the Reagan/Bush tax-cuts (which kicked off the current race to a state of massively unstable and unfair inequality) "turned their backs on the egalitarian origins of the country, by counting on historical amnesia and by fuelling identity-based divisions."
To understand this, let’s look back. Between 1880 and 1910, while the concentration of industrial and financial wealth was gaining momentum in the United States, and the country was threatening to become almost as unequal as old Europe, a powerful political movement in favour of an improved distribution in wealth was developing. This led to the creation of a federal tax on income in 1913 and on inheritances in 1916.
Between 1930 and 1980, the rate applied on the highest incomes was on average 81% in the United States, and the rate applied to the highest inherited estates was 74%. Clearly this did not destroy American capitalism, far from it. It made it more egalitarian and more productive, at a time when the United States had not forgotten that it was their level of educational advancement and their investment in training and skills that was the backbone of their prosperity, and not the religion of property and inequality.
Reagan, then Bush and Trump subsequently endeavoured to destroy this heritage. They turned their backs on the egalitarian origins of the country, by counting on historical amnesia and by fuelling identity-based divisions. With the hindsight we have today, it is obvious that the outcome of this policy is disastrous. Between 1980 and 2020, the rise in per capita national income was halved in comparison with the period 1930-1980. What little growth there was, was swept up by the richest, the consequence being a complete stagnation in income for the poorest 50%. There is something obvious about the movement of return to progressive taxation and greater justice which is emerging today and which is long over-due.