Attacking The Neoliberal Ideology
The organizing question of the first phase of my neoliberalism project was how neoliberalism became the dominant discourse in the US. We looked into the dogma of neoliberalism and some of its pillars, particularly neoclassical economics, especially William Stanley Jevons. We looked at history, with Veblen, Arendt, Polanyi and others. I looked at Foucault, the Frankfurt School, and Pierre Bourdieu, and then read a bit of current Marxism through Wood, and a more or less orthodox defender of capitalism, Scott. These readings led to my current view.
I began the project with the view that the post-WWII economic system had morphed into neoliberal capitalism in the 1970s. I now think of our current economic system as capitalism operating with few constraints and having coopted government to act on its behalf and against the interests of most Americans. The removal of restraints and the coopting of government were driven by an ideology, neoliberalism. The ideology was created by a small group, mostly economists. It explains and justifies domination by wealthy capitalists and inspires acceptance of that domination by most Americans.
Neoliberalism began to take over in the early 1970s when the post-WWII economy faltered. The rich began to pour money into pushing the theory that free markets are crucial form of freedom. One important reading on this subject is Milton Friedman’s Capitalism and Freedom. Driven by huge sums of money, neoliberalism appears to be nothing more than another effort by the dominant class, meaning the rich and powerful, to justify its dominant status both for itself and for the subjected class, meaning the rest of us.
As an aside, I note that economists see themselves as uniquely positioned to explain the workings of society to us drudges, barely able to lift our heads from the machinery of production and shake the noise from our brains so we can hear the fruits of their genius. In support, I offer Friedman’s take on racism from Capitalism and Freedom,3 p. 94.
… [T]here are real problems in defining and interpreting discrimination. The man who exercises discrimination pays a price for doing so. He is, as it were, ”buying” what he regards as a “product.” It is hard to see that discrimination can have any meaning other than a “taste” of others that one does not share. We do not regard it as “discrimination” or at least not in the same invidious sense if an individual is willing to pay a higher price to listen to one singer than to another, although we do if he is willing to pay a higher price to have services rendered to him by a person of one color than by a person of another. The difference between the two cases is that in the one case we share the taste, and in the other case we do not. Is there any difference in principle between the taste that leads a householder to prefer an attractive servant to an ugly one and the taste that leads another to prefer a Negro to a white or a white to a Negro, except that we sympathize and agree with the one taste and may not with the other? I do not mean to say that all tastes are equally good.
In the second part of this series, I intend to look at two issues. First, what do academic studies say about ideologies, especially their creation, and their effect on those who adopt them. Second, what can be done to attack an ideology and dislodge it.
As to the first part, I have several hypotheses.
1. Ideologies are cognitive structures shared by a large number of people. People use them to to to orient their choices, to justify their actions, to explain the outcomes of their behaviors, and to explain themselves to others. They become tools to understand society as a whole. Ideologies do not spring magically into the collective mind. They are constructed by humans, and reflect the personal interests of the constructors to a greater or lesser extent.
2. Ideologies have meaning only when articulated. People may share a set of structures, but it’s when they begin to use the structures to talk about, and thus to share, their a) guides to behavior, b) public justifications for their actions and c) explanations for outcomes, that the ideology can be seen to dominate the discourse.
3. The people who articulate the structure can make it work for their benefit by careful construction of the tenets of the ideology.
4. Once the tenets are established, people reason with them instead of considering the actual facts of a situation.
5. Once an ideology is articulated, it becomes possible to see the real organizing principles, the interests served, and the people responsible. The organizing principles may never be articulated by the creators. This leads to the double movement of ideologies, identified in the case of neoliberalism by Philip Mirowski’s. See, e.g., Never Let A Serious Crisis Go To Waste.
I’ll be looking at literature on ideologies to see whether any of these intuitions are correct.
As to the second part, dislodging the discourse, there seem to be two opposing views. One is that you can’t replace something with nothing, so you have to have a replacement ideology before you can hope to dislodge the dominant ideology. The other pole is that first you change the facts on the ground for the better. This shows people that the old ideology produced bad results. That makes room for a new ideology that explains the good outcomes. The second view seems to be motivating the new breed of Democrats, who want change to meet problems, but aren’t interested in adopting a replacement ideology. Of course, plenty of Democrats cling to their “We’re neoliberals, but not ugly like those Republicans” mantra. This includes most of the current leaders of the Party, who are hooked on big money from corporate interests.
I don’t like either view. I think you have to have some explanation for changes besides meeting pressing needs in order to have a coherent program. Even in the early stages of change, there should be motivating principles. Fortunately as I struggled to get started on this part of the project, I found this fascinating article in the New Yorker, a profile of the philosopher Elizabeth Anderson titled The Philosopher Redefining Equalitysd. It seems to me that she teaches a number of the ideas that I have written about, including the pragmatism of John Dewey who I wrote about at FDL, and what it means to be free in a system where capitalists control much of our lives. I’ll be reading her work and commentary in dealing with the second part.
Finally, a word about current politics. I think the motivating principle of neoliberalism is that the rich should be in charge of everything, not just the economy. In current political discourse, people, including me, say that many Democratic politicians, including Hillary Clinton and Joe Biden, are neoliberals. It’s important to understand the reason I think this way. I don’t think Democratic politicians believe that the rich should run everything. They do, however, privilege what they call “market solutions” and tweaks to the current system over the massive change that is obviously needed. They may not be neoliberal in principle, but they are neoliberal in action. To me this is a meaningful distinction. It means that any Democrat is a better choice than any Republican, but that it’s possible to be better. I worry that if there are no articulated principles for evaluating new policies, there is a danger that neoliberal principles will be used. I see PAYGO as an example of this concern.
Now that the Democrats have taken the House and seem to have momentum going into the election cycle, these distinctions are critical. We need to have this discussion openly, and without regard to the defenders of the dominant class. After all, the dominant class is the tiniest of minorities. It has no justifiable claim to its dominance, and we need to make that obvious.
Update: I forgot to thank Eureka for a comment that crystalized my thinking about how to proceed.
Ed I want to say thank you for this series. While I like to think that I have long questioned neoliberalism I admit that my opposition has always been more instinctive than schooled. As you go forward on your project one question I have is how you will deal with the patina of science that surrounds neoliberalism? Like it as not, and I do not, many people still see Economics as a science and few if any ask about its underlying assumptions or its complete absence of verification as you have. It seems to me that any project to replace neoliberalism will be forced to attack or restructure to restructure the basic heart of the dismal psudoscience.
Again thank you for your serious work.
I was wondering if you would consider how you would respond to the claibe able to dislodge, or perhaps rebuild economics
Scientific theories are only as good as their empirical support: no experiments, no science. In the few cases where neoclassical economics has been experimentally tested, it has failed. The microeconomic principles that underly the general equilibrium theory (the foundation of free market ideology) bear no resemblance to the real world and all attempts to make them even slightly realistic have failed. There are lots of good experiments in economics, just none that support unregulated markets; that stuff is pure ideology with some fancy math to make it look “scientific”.
Exactly. This is not about an interest-free science of economics. I don’t think such a thing exists: economic choices, like political ones, are inherently value-laden. This is about the religion of economics.
I think what is consistent here are whose interests neoliberalism supports: the richest and most powerful actors.
At the beginning of this series I did a series on Thomas Kuhn’s The Structure of Scientific Revolutions with a focus on economics as a science. I also read an early text by William Stanlye Jevons and have discussed it in a number of posts. I also looked at the idea of paradigms in economics, taking as my text the 10 principles of economics that economists all agree on according to the introductory textbook of N. Gregory Mankiw of Harvard and Bush fame. You can find them with the search feature.
In a nutshell, I think economics uses some of the techniques of science, just like sociology and political science. But the subject matter is too fluid to create actual laws or even theorems. As Ken Muldrew points out, science generally calls for a reliance on empiracal support. Economists cling to their laws, as my discussions of the Philips Curve show, long after data contradicts them, and these “laws” continue on in the minds of non-economists, especially politicians, long after they should have been consigned to the dumpster. See, for example, my discussion of Keynes’ article on the death of laissez-faire.
Economists as a group aren’t interested in self-examination and hate change. See my discussion of a paper by the sociologist Marion Fourcade and her colleagues on the superiority of economists.
I will go back to take a look at those thanks!
Additionally I am curious if you have been following the “Journey into a Libertarian Future” series over at Naked Capitalism. The series is largely a long-form interview with a committed libertarian and it is interesting both in the willingness of the interviewee to say the quiet part out loud, but also the way in which it dovetails so much with your comments above.
I remain somewhat sckeptical of the series in part because the interviewee is so perfect in his or her willingness to say things that most libertarians I know either claim to oppose or refuse to acknowledge (e.g. the inevitability of a sharply unequal power structure in a libertarian world, and the need to lie about it). I am curious how you see libertarianism feeding into the neoliberal view. In some respects I think of them as two parts of the same ideology but on the other hand it is clear to me that neoliberals, unlike libertarians, are comfortable with state power so long as it is driven by them or promotes “fairness” in ways that they win, while committed libertarians seem to oppose states in all forms or for any job but the sewers.
The beauty of science is that the epistemology (this just means the theory of knowledge) that underpins it supports the Popperian view of ‘falsification’. As the anti-science people like to claim, while completely misunderstanding the concept, science provides evidence to support a theory. It does not provide proof, except in the single case of mathematical proof.
Any scientific theory can thus be falsified by evidence that does not support the original theory. So Einstein’s Relativity falsified Newton’s Gravity, but the real effects are only apparent at speeds close to that of light. Below those extreme speeds Newton’s Gravity works because it is a perfectly acceptable close approximation.
Much of classical economic theory is an approximation of reality that depends on the epistemological assumption that the economy is an equilibrium system. If this assumption can be defeated at the epistemological level – essentially falsified – the whole of economic theory can be falsified.
It is surprisingly easy to do this. That the economy is an equilibrium system or a system of multiple stable equilibria is the foundation construct from Adam Smith. No one questions this assumption. Every economic ideology from Marx to Friedman has relied on this assumption. It is also this assumption that underpins the need for constant growth and it is fallacious.
Equilibrium is an isomorphy of a closed system. If the economy is an open system, a CAS (Complex Self-Adapting System), which it very clearly is, then there can be no isomorphy of equilibrium. QED
So the big question is what type of system is the economy? Look a the isomorphic laws of closed and open systems and it is quickly apparent which set applies.
But an understanding of General System Theory can also demonstrate that the complex system can be reduced. Reduction is a tool used in many scientific paradigms to help our understanding, think of medicine and how a doctor can reduce some heart problems to say, an ineffective valve, but struggles with MS because the holistic MS problem cannot be reduced.
The economy can be reduced in such a way that supply can equal demand at a particular price point, but only when the complex system is reduced to the point where nothing useful (except the equilibrium relationship) exists.
So its as easy as that! If the economy is a CAS, classical economic theory is bunk!
And now you see the problem, there is no incentive for every economist, every political scientist, banker, hedge fund manager… to accept that they are wrong.
These are the very power-elites who control society and maintenance of the status quo is their goal. Hence Uber-Conservatism, the FS, and the politicians who are losing their constituency must win at all costs, and the rest of us can go and get… well you know what.
While I agree with you about the popperian view I think that “Anti-Scientists” are a many and varied breed. Some do object to his view of falsification while others, notably religious groups, primarily object to the doctrine of materialism which is also necessary to make science function. There is an ongoing debate about just how strong the use of materialism in science is and in particular whether it is merely methodological (all science deals with is the material nothing more) or whether it is total (all things are material and nothing more). Still others, incorrectly I think, object to the belief that science does not consider moral views and should or that science (psychologists) should stay away from it.
With respect to your point about falsification, In one sense Einstein falsified Newton but in another, and I would argue more correct, sense he simply identified the limits of it and saved Newton’s theories by pointing out where they do hold and where they do not. I think of this because to play devil’s advocate to your point about systems perhaps it simply requires that economists find the cases where the economy is a closed system and where it is not. Perhaps nations no longer count as “closed” but the world does?
This is not to say that economics is a science, I do not for a moment believe that it is, but I also don’t think that the idea of economies as systems should be dropped, more than we have to realize that what has been done before rests on very strong, politically motivated, and unproven assumptions.
Philip Mirowski is perhaps the only historian of neoliberalism.
More generally his academic career has largely been devoted to the study of the history and philosophy of Economics.
https://reilly.nd.edu/people/reilly-fellows/philip-mirowski/
He makes no bones about being a supporter of ‘the left’ but holds no belief that resurrecting classical socialism holds any promise, much less Marxism. He has the balls to say that the mathematics of Economics is wrong. They are using the wrong math he says. This is truly radical. He is attacking the very core of of the neo classical consensus.
If your not willing to spend 10 or 50 hours to start to educate yourself on these matters then it isn’t worth bothering
Here are links to YouTube presentations by him. I suggest starting with the last, ‘Should Economists…….’ Admittedly the audio quality of these is often very low.
https://www.youtube.com/playlist?list=PLQWdiYL5PMXHtFu6RpVfKyHftAmYlkxW7
If 100 people become familiar with this stuff, hell 10,000 it’s a pathetic drop in the ocean. Millions of liberals will still think there is no such thing as neoliberalism. In other words this quest is Quixotic.
Virtually every leading Democratic politician is neoliberal. The Clinton’s most notably but it was in full swing by 1978. If the current crop of progressives aren’t, the have no ammunition, no understanding of what they should be. They will always in every case be forced to fight on the enemies field.
Thanks for this. I’ve been steadily learning more economic theory over the years, and it’s fascinating, though often difficult. What frustrates me in this discussion/debate about how things should evolve is that the left reflexively falls back to socialism and even Marxism. You see it in the language, and intentionally or not that language is embedded in this article. You also see it in the way the mainstream media frame these issues. I don’t know Mirowski’s work, but I’m certain he’s correct about this: “but holds no belief that resurrecting classical socialism holds any promise, much less Marxism. ”
This is what the left needs to move towards – alternatives to the the current dogma, without reverting to older dogmas that have failed repeatedly and spectacularly. And the left needs to move away for the attraction to policies that often seem more designed to punish the wealthy than to yield a more vital and meaningful system. ‘Anti-neoliberialism’ is not a philosophy or a system, it’s a posture, and by itself is not a very useful posture.
It seems to me that when you see the serious problems with capitalism (alienation of the workers, destruction of the planet), it’s natural to start with criticisms of capitalism and historically formulated alternatives as you grope towards a solution. That’s especially true if you think the problem with capitalism is that it is inconsistent with democracy in the long run, and you want to halt the erosion before it kills off true democracy.
Still, I see this as a problem in the long run. Capitalism and socialism seem to place too much emphasis on production and consumption at the expense of improving human experience of life. You might want to read the New Yorker article I link. It offers a different organizing principle.
There is no difference between the economic theories of Marx and Friedman. They are both accepting of the same epistemological assumption that the economy is an equilibrium system and consequently make the same fallacious errors (see my post above). Their only real difference is about who should benefit, the workers who create the wealth or the capitalists who do whatever the fuck it is that they do.
The debate is lost because it was nonsense in the first place and the capitalists hold all the cards.
I cannot agree with that. Marx at least was not an opponent of Democracy or democratic ideals, indeed he took it as a base assumption. Friedman was basically an elitist. I do grant that subsequent followers of Marx such as Lenin and Stalin, and Mao dispensed with Democracy but their dispensation marked a philosophical shift from the people owning the means to the party.
I think you are right about htat. Ellen Meiksins Wood is quite clear that democracy is a central value of her Marxism.
I love the New Yorker, and I’ll read the article you linked. I will say, though, that when you refer to “workers” I fear you’ve already fallen into the fallacy I mentioned. The word “worker,” like the word capitalist, is hopelessly associated with Marxist/socialist rhetoric. I have worked in a variety of industries, for companies big and small. I have worked for myself, and know well a fair number of people who have started their own businesses. And even when I’ve been working for a large, soulless corporation, I never thought of myself, or met anyone who self-identified, as being part of a “worker” class. I was even the president of a union, and one of the difficulties was that most union members identified with their company, or their work group, or their specific occupation – never as a “worker” who had some profound kinship with other workers.
There’s a class of people who use the term “worker,” and they’re rarely workers themselves. The people they refer to as workers generally idealize the thought that they could start their own business, become captain of their own ship, find their way out of living paycheck to paycheck. And I don’t mean to call you out for this specifically, and apologize if this is terminology that you rarely use, it’s just that as soon as these discussions start up, I start hearing the rhetoric that sounds like the same rhetoric that I think the average American reacts viscerally against.
I use the term worker in a fairly specific way: people who must sell their labor in order to survive. The point is to distinguish those people from the people who don’t have to sell their labor in order to survive. I realize there are plenty of people who think of themselves as in the latter class because they own their own businesses. They aren’t unless they don’t have to work in the business as a matter of survival.
Thanks for responding. My point isn’t that your definitions of “worker” or “capitalist” are technically incorrect, or that the average person doesn’t understand the terms properly. It is that the terms themselves are, to be very blunt, toxic and counterproductive. You will not win friends and influence people with that language, and explaining to people that contrary to there self-image, they are among the worker class being exploited by the capitalists.
One of my observations, from a life lived in a wide variety of locales, is that the average American in the 25-75% mound of the income/wealth bell curve has more resentment of the people in the lowest quartile who don’t seem to be trying as hard as they are. They give very little energy to hating the upper 1%, except sometimes in a vague theoretical way. Put more simply, there’s a broad swath of Americans who are much more angry about possible welfare cheats than about Wall Street fat cats.
Mirowski is a very good analyst indeed, but let’s not forget the recent excellent deep history provided by Quinn Slobodian in his Globalists
Slobodian’s book is excellent. Just finished it. Two thumbs up.
Ideologies are a snapshot in time. By the time you have studied and named them, the people described by your label have reformed with new partners to form a new coalition slightly different than the old. And red is now blue.
Ed, so good to see this. I’ll hope to follow this phase more closely; I simply couldn’t manage to keep up with the earlier phase of the project.
I’d like to pass along some things that you may find useful –
A new podcast, “Pitchfork Economics”, is now out in the world. A recent episode has Yuval Noah Hariri (“Sapiens”) as a guest, and sheds light on how human communications, ability to create (trade, social) networks is a phenomenal means for spreading ideologies. It is available at iTunes, or here: http://www.pitchforkeconomics.com.
The host, Nick Hanaeuer, seems to be wrestling with the same questions you are: how does an ideology take hold, spread, and become entrenched – especially when it promotes inhuman ideas? He’s a particularly interesting thinker, in part because he has such an unusual breadth of business background. In addition, he was an early investor in Amazon, so it became abundantly clear to him that existing, neoliberal economics is a fairy tale.
IMVHO, the significance of metaphor is essential for ideology. As people make their daily bread in new ways, with new tools, they often tend to hold over old ideas, that finally don’t fit. The Industrial Era neoliberalism is not suiting today’s world, and politicians who can’t navigate outside of that structure are flailing. Part of what I find absolutely fascinating about our present moment is that the Russian oligarchs and other more industrial, extractive business [looting] models appear to be vehemently clinging to neoliberalism. It still kinda, sorta fits their needs; meanwhile, elsewhere across the digital divide, neoliberalism is a fool’s grift.
Having read a fair bit of anthropology (and lived among illiterates), it’s been interesting to ponder how people cling to ideas that seem to take them down, as if tied to a sinking ship. I’m going to toss out a book that is completely off the wall, but I have lately been reading/listening to “The Wheel, the Horse, and Language”, which arguably has a lot of insight about ideology.
The author traces the roots of Indo-European language(s). (This is **not** because he’s a supremacist; he’s able to bridge linguistics, anthropology, and related fields into a wondrous overview of how we got to be who we are). He begins by tracing word roots, and language shifts, from 6,000 BCE onward. I had not realized that ‘horse’ (ek-wus*) was probably not domesticated until relatively recently — <=4,000 years. Significantly, ‘wagon’/wheeled conveyance (ek-wheelus*) emerged with the horse. (And ‘weol’ [wool] from newly domesticated sheep, often spun on a spindle, are also relatively recent in terms of human history.)
Once the wheel and the horse were part of the vocabulary, we hear about Pegasus, the Great Wheel of Heaven, and of related constellations and stories and dieties related to spinning, to turning on an axle (the heavens were thought to turn about a pole each night).
And there also appear to have been new ideologies and social formations: men new to riding horses to manage (and breed) cattle become patriarchal, establish clear marriage rituals (related to property), have ‘bands of brothers’ that are either chasing off rustlers, or off rustling from other cattle owners. (“Gunsmoke” was the longest running US tv show IIRC, so this ideology has lasted eons.) I mention all this only because the book offers a comprehensive overview of how ideologies emerge from shifts in technologies/social groupings. If you can find the time, it might offer a long, broad view of ideology formation, within a very non-judgmental, panoramic vista.
Language, rituals, rites of passage, social relationships: all are integral to ideology. I look forward to more posts.
* my ‘translations’ are incorrect – I’m only doing this from memory at the end of a day… but you get the idea.
I’m not sure I buy the premise that Neoliberalism is an industrial era idea per se or that it is not working in the modern world. In my view Neoliberalism is a repackaging of the longstanding argument that some are inherently better than others and that they should be free to act as they see fit and that the plebs should be obedient. In the place of God(s) setting the hierarchy you have “the will of the market” but the basic motivation is still the same. And arguably neoliberalism is working quite well in the new world now that so much can be send online across all physical borders and across all currencies. For those on top at least Neoliberalism is working, for the 99% however…
I came to emptywheel for the posts and discussions around the Mueller investigation, but now come here also for your neoliberalism project. I also read the New Yorker article and have found an article she wrote for Vox (“How bosses are (literally) like dictators”) and an interview at Jacobin (“Where Despots Rule”) to be helpful to my understanding of her work, particularly as it relates to her book on the workplace, “Private Government; How Employers Rule Our Lives (and Why We Don’t Talk about It)”). First time commenting, so I hope I worked this editor correctly.
Welcome to the comment section, and thanks. This project has benefited greately from comments and suggestions; I’ll take a look at those before plunging into the book.
I was just thinking about you and the next phase of your writings, and wow, this is a great opener.
Thanks also for the link and description of the profile of Elizabeth Anderson- I hope to read that next. I appreciate Dewey and what may be called old school pragmatism, which is decidedly different than what is currently called pragmatism- which seems instrumental and geared towards anything _but_ positive social action. (I would also love to someday find an explainer of those distinctions.)
I would add to your hypotheseal point 1 about ‘cognitive structures’ the integrated notion of ~heedless practiced action (what others may call autopilots or ‘unconscious’ behaviors). It would be a subset, I suppose, of ’embodied cognition.’ You have this in your ‘current politics’ para. on dems practicing, if not espousing, neoliberalist ideology (as you define it there).
To give a simple example: if I turn my back to you and crumple a piece of paper, you ‘know’ I am crumpling a piece of paper not just because you hear it, have memory of similar sounds, and access to maybe contextual factors like seeing me grab paper before I do it, but also because your own forearm/hand flexor muscles fire: a partial body-wide recreation of the event is how we ‘cogitate’ about it. As it stands, all that would have happened while you read what I wrote. (The mirror neurons literature* has this type of stuff, viz. empirical findings and how they may relate to empathy or social action in a more literal way. I raise the topic here as Foucauldian/Bourdieuian links. We do have to practice our way out of this.)
We enact, recreate and perform parts of this/these/any ideologies possibly more than we think about them with awareness, and this may be an important point for change. This pivots back to your points about incremental changes in a vacuum of new ideology vs having a plan to reach for. I suppose it could be parsed either way, and incremental change is better than no change (but incremental of _what_). For reasons already discussed here, I think there is value in creating a new vision to shoot for. I think a sports analogy holds, that your aim is better when you follow through on your shot— towards a goal. So we’ll get incremental changes as this new vison is worked out, I guess, and may they iterate and ramify nicely.
————
*Here are a couple of pop-sci write ups; I see at least one link to an author pdf, but of course pubmed is free to check out the topical literature generally, if desired
This Is Your Brain on Sports
Mirror Neurons Also Respond to Language and Sound
Almost TMI. My cogs need to get more engaged to digest your points. Thanks, I think.
Post updated. Thanks again.
What is your take on PayGo? I’ve done a little reading about it, know there’s controversy, but haven’t settled one way or the other.
Paygo is asinine because it is unilaterally self disarming.
It seems like a vehicle for future justifications of cuts. And where do cuts always come from? The MIC (haha, just kidding). It always comes from what benefits the people most, social safety nets and entitlements.
Pay-go would appear to be Nancy prioritizing control over her now diverse progressive members and to dampen expectations of change.
One would think one could manage those expectations – change for the better does confront a difficult environment in the Senate and White House – without sacrificing progressives. When Obama did it, he lost – drove away – progressive support. The resulting lower voter turnouts at elections worked to the advantage of those opposed to change.
If the Dems repeat that, they will greatly reduce their chances of winning the White House or a majority in the Senate. The Dems will never win over Trump supporters or evangelicals by being more conservative. They might win them over, and they will certainly energize their own voters to come out and vote, if they demonstrably support making government work for the 99%. That it did and does not now do that is one reason so many voters ignored the reality of Trump and voted for him anyway.
Yeah, that is likely right. But Pelosi gave both ways to insure control. For better and worse, Pelosi is, by a light year, the best leader the House Dems could currently have. I will grant her the leeway to do so.
” I will grant her the leeway to do so.”
lolol… I’m going over to get her autograph next week and will let her know, bmaz.
At the end of the day though Paygo is also something that makes sense to Nancy Pelosi, it prioritizes cuts over spending which the donors love and as she herself said: “We’re Capitalists, Deal With It”
This appears to be a difficult problem, and I don’t know enough. Stephanie Kelton thinks it’s bad politics and bad economics, and Dave Dayen isn’t fond of it either. These are two good places to look for information, both are big on twitter.
For me, in the long run, we need to repeal the statute. In the short run, it gave leverage to the progressive newcomers to gain tangible results, including representation on the money committees for progressives and hearings on Medicare-For-All. I’m glad to see progressives getting something by taking strong positions and compromising with solid gains.
I wouldn’t be surprised if Pelosi’s insistence on Paygo is just a strategy for the next two years. As her spokespeople have pointed out, it’s a rules manifestation of the Paygo law…a law with plenty of loopholes that have been used frequently in the past.
Insisting on Paygo for the next two years costs nothing since major legislation will not pass the Senate anyway, but it does allow the Dems to claim the mantle of fiscal responsibility. No, not to convince any Repubs to vote for them, but to establish a narrative that they are the party who does the hard work of governing – the adults in the room – as opposed to the freak show of the last two years.
Implementing Paygo for a large bill would require a concurrent tax-increase bill, which would be a way to say, “Look, we aren’t afraid to tax the crap out of the rich and give the middle class a real tax break.”
Number one goal is to take the Senate and the Presidency, and anything Nancy can do to achieve that goal while advancing a Progressive narrative, she’ll do.
Or I’m just thinking wishfully. Time will tell but I’m willing to give her benefit of the doubt and see how she plays her hand. As I said above, there’s no harm to in doing so for the next two years anyway.
You’re counting on buy-in from a press that worships the brilliant mind of budgetary wonk Paul Ryan…whose public approval rating on retirement was 12%…
Plenty of anecdotal evidence that Paul Ryan was viewed as complicit and weak. However, here’s what it is *extremely* important to understand, and keep educating others:
AOC ‘70% tax increase’ applies only after $10,000,000. If you make $8,000,000, you are still ‘under the wire’. If you have more than $10,000,000, it would be nice if you had enough functioning brain cells to realize that public goods (ports, airports, highways, public education, courts, clean water, waste treatment…) were critical to your prosperity. So one nice thing that pushing this idea should do is reveal who is so greedy and self-absorbed that they can’t deal with being taxed at 70% on income over $10,000,000.
It was amusing earlier today to see Grover Norquist howling like a stuck pig about this idea on Twitter, as if this proposal is going to somehow ‘starve the rich’.
It was almost as amusing as the idea of Paul Ryan going to a hedge fund. Popcorn!!
Have a heart for Grover Norquist. He has only ever had one job his entire career, and he only has one skill, squealing like a stuck pig. If he didn’t do that he would have nothing to do but listen to Laffer.
And, lets not forget still credits him with “being serious” even though some of his laughable budgets had basic arithmetic errors.
Bingo. If you can’t pass true progressive reforms because of the Senate, Paygo doesn’t change anything but does eliminate the fake criticism of out of control spending by liberals. It is strategy for 2020. Nancy knows a thing or two.
Timely thread, embeds topic of the changes proposed here in larger cultural milieu:
John Rogers on Twitter: “1/ On the left is a teenage AOC dancing with her friends as part of a nationwide viral video craze. The Right called this proof she’s a “nitwit”. Next is GOP Speaker of the House Paul Ryan. Who thought this photo was a good idea AT AGE 42. He was considered a policy genius.…”
“2/ That’s funny enough, but now I’m going to loop in Louis CK. So stick around.”
“3/ Paul Ryan, whose his singular achievement *in his 20 year career* was blowing a trillion dollar hole in the economy, got the easy ride because he fit a stereotype of “cool” for certain journalists — *and older men*. Confident, square-jawed, serious talk.”
…
“15/ And if the cultural shift is “Greed is *not* good. We gotta take care of each other” or “rebellion isn’t secret drinking and naughty-giggle sex but actually giving a shit about other people’s dignity” … I’m okay with that.”
Times Up, Part Deux.
Looking forward to see where you go with it.
In mulling over the overthrow of neoliberalism, it strikes me that there is a difference between, say, reading Hayek and being propagandized by the Heritage Foundation. In other words, if elements of an ideology have been seized upon to message and propagate a politics of deception, as I believe is the case, what is the target one should choose to effect change? I wonder if there would be informative parallels in the history of the politics of the eugenics movement for example.
Think of hayek as a theologian, and the heritage foundation as a seminary.
Setting aside what may separate a religion from an ideology, it’s difficult for me to envision the Heritage Foundation as a seminary. If Hayek were Paul the Apostle, the Heritage Foundation might be the papacy under John XII.
I think d4v1d has a good point. I tried to read The Road To Serfdom, but it was too tedious, and I can handle a lot of tedium. I did read Keynes and Hayek, by Nicholas Wapshott, and came away thinking that Hayek is a second-rate thinker, whose career was enhanced by rich people who liked his anti-Marxism.
Having said that, I agree with you that reading and understanding Hayek is completely different from accepting Heritages reformulations designed to bolster neoliberalism.
Hayek and ‘The Austrian School’ is the very worst of the ideologues. Its members take the work of Adam Smith and strip him bare to “the Laws of the Markets”.
Heilbronner – The Worldly Philosophers (p54) – “Not only are the laws of the market essential to an understanding of the world of Adam Smith, but these same laws will underlie the very different world of Karl Marx, and the still different world in which we live today”.
I have recently finished reading the complete published works of Adam Smith, The Theory of Moral Sentiments (1759) and all five books of The Wealth of Nations (1776). Also the three biographies. My intent was to discern for myself the ‘Laws of the Market’, they are;
Self interest (greed) is mitigated by competition.
Accumulation is mitigated by population.
So only two laws, one micro and the other macro.
And by applying those two equilibrium laws one can get to the conclusion that the market is the best allocator of resources and the Austrian School takes this to the extreme ideology of “free markets”. The real economy does none of these things.
Smith’s first work is his justification for equilibrium and it is horrendous! If one reads it from the perspective of a Complexity theorist it is exhaustingly naive. He provides no axioms from which his theory can be constructed, instead he seeks to justify his belief in the essential goodness of the people of his social class. His assumption is that Presbyterian Whiggs will be the best custodians of society. Not too much harm with that except for its complete moral bankruptcy.
The Wealth is his justification of ‘the laws’. It fails spectacularly. There are reams and reams of irrelevant examples but no logical linkages. No axioms, no arguments, no logic. Lots of his claims seem intuitively correct and they probably are, but his holistic system fails.
The whole of Western Civilisation is shackled to this fallacious equilibrium proposition we all know as economics.
Part of what I was trying to say was that I think one might be able to understand the success of neolibralism as an ideology without knowing a whit about Hayek, the Chicago school, or even political economics in general. It gets back to what I thought was one of the interesting takeaways from the first part of your series; why would citizens whose long term prospects are clearly disadvantaged by the widening economic rift in out society vote for politicians, who might claim the mantle of being a neoliberal, that support those very same policies? Neoliberal economic theories are consistent with and in fact can be used to rationalize an ordering of things, including social arrangements, that is natural and just and should not be interfered with. But at that point the original ideas aren’t really in the driver seat anymore. And maybe that’s one lesson from Trumpism-you don’t need any theoretical window dressing.
Mr. Walker asked, “Second, what can be done to attack an ideology and dislodge it?”
Mr. Walker had previously observed that, “I now think of our current economic system as capitalism operating with few constraints and having coopted government to act on its behalf and against the interests of most Americans.”
I agree that the government acts on the behalf and at the behest of the owners of wealth. I have reason to believe that that fact is completely and totally inconsistent with the neoliberal ideology. Therefore, at least one way to attack and dislodge the neoliberal ideology is publicly to expose the rank hypocrisy of the owners of wealth greasing the palms of our government officials for the express purpose of collecting government benefits at the expense of the governed.
Of course, it’s only a tactic–not a strategy. But it is a tactic that should be deployed most especially whenever the owners of wealth bemoan their “sacrifice” as Holy Tax Martyrs.
I propose a better description. That is that neoliberals have taken over the government in order to impose the markets they believe are needed. It must be understood that neoliberalism is not laissez faire. In a way it is the obverse of free markets. Its project, again, is to use government to design the markets they think we need.
This bleeds over into simple selfishness of course. The great project of inflating financial markets, via designing the markets to inflate, with large does of help from ‘monetary policy’ has little to do with the project to make markets God, in the minds of most of the 1%.
And of course too, the libertarians as always serve as useful idiots.
” Its project, again, is to use government to design the markets they think we need.”
No. You miss the point of the neoliberal project.
The purpose was to enable them to design the markets they think they need, and get government to support the implementation.
If you haven’t read Slobodian, do so.
I think your finding a distinction without a difference.
Drawing distinctions without differences is irresistible to me.
For instance, suppose that goods are one thing and wealth, quite another. Further suppose that capitalism excels at distributing goods–not wealth, nor even services, for that matter.
In its grossest oversimplification, capitalism supposedly forces the producers of goods to chase after the consumers goods rather than the other way around. (Never mind that most of the consumers of goods are also producers of goods or at least services, these days.)
If the wealth lies ever elsewhere than in the goods, then . . . OMG! I’ve been rooked. Haven’t I? Has anybody else here been rooked like me?
Rapier said, “It must be understood that neoliberalism is not laissez faire.”
I agree. Laissez faire was always a straw-man argument. It has never really existed outside the imaginations of its devotees. Chances are that the necessary conditions for the existence of laissez faire are completely and totally inconsistent with the actual economic behaviors of libertarians or neoliberals or any other human economic agents.
IIRC, Mr. Smith’s rules for government intervention in the economy were a tacit admission that laissez faire was quite perfectly impossible. OTOH, Smith may also have distinguished between public versus private goods for the sake of avoiding a stint in The Tower of London, on the theory that being dubbed a radical was a stern warning in those days.
IOW, Smith sued for peace with the “merchantilists” (a.k.a. militarists, colonialists, imperialists) right up front. Power opposes laissez faire except when it’s substantially make-believe.
In the 80’s I was an organizer for the Hotel and Restaurant Employees union.
Organizing is doorstep politics. It is all on the line when you are face to face with an individual who works in the kitchen who you are asking to sign a union card so we could hold a representation election.
We were asking someone to buy into an ideology for the almost exact price a month’s worth of bus tokens cost. Moment of truth. We won some . We lost many.
It’s important we ground discussions on ideologies, especially if you are speaking about changing them, to the ultimate customer, the rank and file citizen.
There is where I fear the D’s will vere off and lose where they could win if they restrain themselves to speaking in plain terms to the circumstances the average american faces.
That is an excellent point. At a personal level, I think I do a decent job of writing for the readers of this site, but I know I struggle with simpler explanations. This site is WordPress, and one of the features ia a set of reading comprehensibility tests. I routinely fail, and try to rewrite to make things clearer. It gives me hope that the new breed of progressive Democrats talk plainly about their goals and the reasons their goals are good ideas. I’ve seen Bernie Sanders in person and on the TV, and he talks quite clearly and more important, he repeats the same goals time after time until they become normal. That too is a skill that other new Dems have.
I believe they are creating the space we need to reconsider neoliberalism in works like mine and many others.
Ed, if you read this post, several hours later, I should just like to say… “Fuck” WordPress and Microsoft who try to correct our English. Do me a favour, and never check your English against some tech program, it will just be an algorithm, written, as the Donald might say, by some 400 lb… well you get the point. If like me you are dyslexic, use your spell checker!
I had a lovely response to a post much further down this thread, I hope it was not a back-handed compliment about the prosaic nature of my posts. I shall ensure that in the future they are all in Iambic Pentameter to lend some poetry to my prose.
That you have >100 responses to your article must give you confidence that your writing is top-shelf.
Theoretical economists are equivalent to theologians (Friedman, Aquinas, whatever) who sell a priori untestable ideas. What neoliberalism turns out to be is neofeudalism – dukes and earls replaced by CEOs, castles by corporate HQs.. maybe if we start calling it that – neofeudalism – we can get some traction.
Credit card debt is the new indentured servitude.
and college loans
There is a force said to rule all else. It is held to be omnipotent and omniscient. Its arcane rules are interpreted for us by old authoritarian white men who urge faith and obedience. The reward for which will come at some future time. Criticisms are taken as expressions of dangerous heresies to be silenced. Questions are evidence of ignorance that can be swept aside by repeating the jargon of its foundational doctrines. In addition, the use of certain formulae, wielded like shamans’ incantations, can be used to frighten all but the most stubborn into submission. Since the complexities of the doctrines are unintelligible to the laity, the claims of dissenters can be safely ignored.
Does this sound like theology? It is. It is also a description of the beliefs underlying capitalist economics. A rank and file blue collar unionist at the time, I wrote a version of this just before the WTO meeting known as the Battle of Seattle. Later, I went back to college and then studied theology at the grad level. I know bad theology when I hear it. And by terrible experience, I know a bad economic system, one that treats humans as expendable. From semi-human recognition as “personnel,” we have been demoted to “human resources.” Things to be strip-mined and whatever remains discarded. Surely we can come up with a better reason for existence than the production and consumption of goods and services along with the ecological destruction that entails. Externalities that everyone but economic theorists consider vital.
Thanks for this excellent overview. The only thing I would add is the reliance on expertise/credentialism in economics tends to also hide its profound neoliberal biases (faith in markets in an new age of monopoly). To me, at least, that’s why Ms. AOC is such a threat. She is one of the few D politicians openly advocating for a non neoliberal agenda.
I don’t want to presume any superior knowledge of neoliberalism or deflect or diminish Walker’s work. I’m just a dilettante. I had a post above linking to Philip Mirowski the aim of which is to introduce the most basic historic and philosophical concepts. The words ideology or dogma do not quite cover what neoliberalism is. Professor Mirowski is a serious intellectual who says that neoliberalism’s aim and success is more and all encompassing. It is epistemological, dealing with the very nature of knowledge, and ontological dealing with the nature of being.
In both cases it was Hayek’s idea that the ‘Market’ is the ultimate arbiter of even knowledge and being. One does not have to know much of anything about philosophy however to attack neoliberalism and philosophical arguments can’t win in the political world anyway. What you can use is a very simple idea that will disarm neoliberals and the now large majority of people who are it’s willing accomplices.
That idea is that neoliberals are saying that the Market is God. They are saying pretty much directly that no person, nobody, can know more than the Market. That humans must adjust to and surrender to the Market.
A crucial thing is they say all markets are the same, They are not. There are many kinds of markets and the results of markets are largely determined by the design of the markets. Also keep in mind that markets can be corrupt.
Our economic markets have been designed to benefit the few and they are corrupt. And the marketplace of ideas or the political market, and such woolly ideas, are a load of crap.
It all may be connected: the end of the post-war economic boom, 401ks, drug money, the collapse of the Soviet Union and the consequent plundering, …, and neoliberalism. However it happened, I’m pretty sure that capital’s rapacious demand for return led to the debt economy; an economy based not on capital investment but rather the creation of debt such as: nearly inescapable credit card debt, sliced and diced mortgages to people who couldn’t afford them and equity loans designed to siphon the last of any working class accrual, inescapable student loans to students with issues payed up front to for-profit universities and to other students at other universities as well. Oh, and the government played its role; congresscritters from small, ignorant, backward states tend to come cheaper.
For “market,” substitute the wealth elite. Submission to the dictates of the market is equivalent to submission to the dictates, the priorities, and needs of that wealth elite. I think that’s one reason they worked hard to eliminate antitrust law and enforcement, because they worked to limit the concentration of wealth and power.
They did it partly through eliding those two attributes from the academy, substituting the narrow attribute of price. Supposedly, that’s all that counts to consumers. The debate over industrial, gmo’ed, and drugged chickens and meats suggests that the narrow focus on price as the sole measure of economic or – gasp – social good is misleading.
The misleading use of price in neoliberal economics is a bit like studying physics or higher math without incorporating time into one’s calculations. Flow, change, rates of change are fundamental, especially where apparently low-prices mask monopoly, lack of choice, or the social and economic conditions required of man and beast to achieve that price.
Nicely stated, earl. What the wealthy get is guarantees for continued wealth, security in lifestyle, and not a free market, where any competition can thrive. Crony-capitalism.
I think there is also an error in the narrative that pay is what generates equality (which seems to be Democrats’ new messaging via the townhall with Pelosi last night). Pay is still solely dependent upon overlords (which keeps the established crony capitalists at the top). Wealth and security (not border wall or military security) are the true indicators of equality.
Only talking about pay leaves the structural problems intact. It is to argue for a bigger slice of a shrinking, rotten pie. As if there were no others, like the tasty delicacies stashed in the Northland refrigerators of the wealthy. Or wondering about what disturbed ecosystems mean for the pie filling supply.
I’m an old fashioned labor leftist, resolutely pro-union because that’s all we have. But I admit unionism is inherently only about materialist accumulation. Some of which does make life more comfortable and enjoyable. However, it feels hollow despite the consumerist propaganda. Especially for those of us who have had what may be called mystical experiences. We working people may not be able to express what’s missing. It’s difficult to characterize something not there. Yet questions about the meaning and purpose of life underlie the gut feeling. An adequate theory of economics should not ignore that.
This is where I locate ~ Life, liberty, and the pursuit of happiness.
Yes Rafi. I suppose there will always be unequally distributed wealth (in terms of money), but there needs to be a wealth of dignity and value for all at every level. Certain classes of people shouldn’t be considered established prey, less worthy, and left to the vultures. The underclass are treated like industrialized farm animals or the hunted. At every step there is risk of being brought to the ‘slaughterhouse’ via financial systems, insurance systems, the court systems, etc. Lack of one paycheck can break them and put them into the vortex of debt, collection, homelessness, unemployment, jail, untreated illness/injury and so on. We know money doesn’t make anyone a better human being. And yet there is often cruel punishment for not being rich.
At the least, guaranteed healthcare (not insurance) is one step toward providing security against forever indebtedness and obligation to monopolies (in order to keep insurance). That adds to wealth. The security of a net. Kindness and compassion is wealth, as is respect.
Worshiping the upper echelon is a fool’s game since it is often a place for miserable ratbastards who will never be happy/satisfied no matter the collection of assets, things and ‘worth’. Trump is a prime example of this psychology.
It comes as a surprise to many people to learn that the economic theory of general equilibrium doesn’t include time (that’s why it’s an equilibrium instead of a steady-state). How could you possibly make sense of economic transactions without time? Every aspect of buying, selling, producing, budgeting, and generally engaging in the stuff that economics is meant to describe involves time as the most critical variable. It’s not included as a Lagrangian-style space-time, either, it’s just not part of the framework.
Economics is much more like biological evolution than a static clearing of markets with omniscient, rational agents. Evolution, too, is often mischaracterized as nothing but cut-throat competition between species for limited resources. Sure there is competition, but there is also cooperation and there is parasitism and those are both at least as important as competition (think of it as a triangle where competition creates efficiencies that lead to scarcity. Scarcity drives cooperation to innovate, leading to surplus. Surplus provides an opportunity for parasitism which drives diversity as a defence against parasitism. Diversity leads to competition…repeat). It’s like an arms race where there is no overall goal but the process leads to complexification – a vast array of strategies for survival. Economics should be treated like that rather than as an optimization of resource distribution.
Excellent points and nicely explained.
I second that emotion.
Thirdness.
The images of “nature red in tooth and claw” and “survival of the fittest” mesh with Social Darwinism and the predominant economic mythology, but are inadequate to understand actual nature. Almost all plants, especially trees, live in obligate symbiosis with fungus on their roots. Associated with this subsoil mycorrhizal system are thousands of species. This alone makes cooperation the dominant mode of existence on Earth. Without considering tree canopies, gut and skin bacteria, mitochondria, or chloroplasts. Competition is also far easier to model. The number of factors in a complex system like the mycorrhizosphere make that nearly impossible.
So we’re living with a skewed idea of what is natural, and that seems to limit how we think about other systems. Economic theory focuses on its ideal of competition. (Yes, competition is in reality very limited since those who benefit most by rigging the system have the power to determine legal codes. Set that aside for now.) Look at any corporation. It is a hive of human cooperation without which it wouldn’t operate. In addition, the physical and electronic infrastructures of surrounding communities make possible the delivery of its goods and services. So do the totally ignored externalities of natural resources– try living without clean air or water.
So why do we go on in medias res? How can any adequate economic theory ignore its own vital requirements? Perhaps it’s like a joke a leftist economist told me. A chemist, a physicist, and an economist are stranded on a desert island. A large can of beans comes floating in. How to open it? The chemist suggests electrolysis, current to rust the can open. Takes too long. The physicist offers to rig a series of levers and pulleys to break it open. That would just smash the can and ruin the food. The economist says: “assuming a can opener…”
Given the looming ecological disasters and wide-spread human discontent, it’s time for a foundational economics. A comprehensive theory that takes responsibility for the lives of the people and environments upon which it ultimately depends.
Nice quote on Friedman’s perverse description of slavery. If he were a judge, the most polite description of his attempt to relieve the haves from for their discrimination would be to call it dicta. Friedman removes social meaning and human cost from his supposed economic description. Bullshit.
Friedman was a courtier whom those with power adopted to further their interests. What is true for Friedman individually, I think, is true of neoliberalism in general. I consider neoliberalism to be elaborate special pleading for the haves. It has been wonderfully and durably financed by them, because it does even more for them than its predecessor, Social Darwininsm. SD was neither social nor darwinian: it was an excuse for over-consumption, brutal selfishness, and predation. Not much has changed.
I appreciate this succinct and informed take-down of Friedman and neoliberalism. Thanks! On social and ecological costs, see my post above.
For those of us from here in our wonderful Sonoran Desert, and in particular, our view on Neoliberalism, is just another of the European importations and for which we recognize as the “smash and grab” of both politics and economics.
And how do we defend ourselves of the to this importation, consider the following:
The Intersectionality of a National Municipal News Network?
When it comes to the reading of one particular tea leaf that addresses our future, the uselesness of the traditional White House’s Friday Night Dump of the federal government’s preferential news releases that reinforces the ‘thinking’ in the White House, does not bode well for the voters to consider for the next election cycle. And from our political perspective, the always ongoing battle between the federal government and our municipal governments, the municipal governments have an ‘unmet need’ to address the concerns of voters on a local basis, but can be accomplished more constructively via a Municipal News Network.
Thus, the establishment of this Municipal News Network consisting of an approximate 50 municipalities that are, for the most part, urban-oriented and operating with a small budget and consisting of a half-dozen journalists operating locally, would provide a comparison and constrast vehicle that would permit local voters to determine for themselves, and without the floozery or boozery of ‘fake news’, what’s proven constructive in addressing our ‘unmet needs.’
Take, for example, municipalities East of the Mississippi River and to the West of the Mississippi River, would give to each of us the opportunity to ‘yardstick’ the Ideas that best enable greater civic engagement that personsifies the Unassalable Facts versus the Propaganda of Self-Interest and which manifests itself via Citizens United.
Consequently, the establishment of this Municipal News Network would diminish the ability of the the well-paid intermediary or middle man that is dedicated to ‘influcencing’ the outcomes that have proven to be somewhat detrimental to the middle class even from the continuing and unrelenting advocacy of the local Chamber of Commerce.
And furthermore, the voters need to know more about how races and ballot propositions are crafted and advocated, otherwise, we are subjecting ourselves to the determination of the less than stellar public policy initiatives as evidenced in today’s Great States of Grizzle and easily identified as Wisconsin, Michigan and North Carolina. Further, public laws that prohibit the disclosure by non-profit organizations that are conduits to and from ‘dark money’ as the stimulants for political operatives, have to be challenged by Progressives.
You haven’t listed von Mises and Hayek (or any of the Austrians) amongst your research. They were arch-proponents of free markets after watching government interventions devolve (as they saw it) into fascism.
I think a less tendentious reading of neo-liberalism would note two points that have to be addressed in any alternative. First, markets are far more democratic than government bureaucracies (as Milton Friedman once noted “you can vote for any colour of tie you want … and get it”), and they are by far better at producing wealth than any alternative.
The reason for both is that under most circumstances they can gather, collate, and disseminate accurate information from highly dispersed sources. There are well known situations in which they fail in theory (externalities, as with carbon emissions, being a key example). But market failure is invoked far more often than it actually occurs.
The bigger issue usually is that we don’t like the information the market is giving us. As in the case of racism, as per your Friedman quote. The problem is not with the market, it is with people’s preferences. Any non-neoliberal solution you are going to arrive at will involve marginalizing these people, and substituting your preferences for theirs.
It should be noted that attempts to get rid of markets as a way of allocating resources has been tried several times. The most successful attempt was in Russia, where (after imprisoning and/or killing millions of people who didn’t have the right preferences) the ended up with a very poorly functioning “social market economy”, that was famously neither a market, nor was it social. It wasn’t the latter, because it did a very poor job of picking up what people in society actually wanted.
The most recent attempt to drive a harpoon through the stake of neo-liberalism was, of course, Hugo Chavez, who was cheer-led by many on the left, including by left-wing economists. Neo-liberals understood that Chavez’s program was going to lead to penury and tyranny in the early 2000s; the left is only now coming around. It should be noted that the other nominally socialist governments in the same region that worked more or less within the neo-liberal orthodoxy didn’t end up driving their countries into the ground.
So, if you are deciding whether you need a counter-program to replace neo-liberalism, let me vote for “you say you want a revolution, we’d all like to see the plans.” Because there is a lot at stake.
Welcome, but you’re a little late to the party. Ed has been at this for a few years and has previously discussed Hayek and von Mises.
One of neoliberalism’s successes, given its novelty and previous existence as a fringe idea by fringe thinkers, has been to deem its critics as partisan, biased or prejudiced.
One attraction to Ed’s work is that he examines the biases inherent in establishment and now neoliberal economics, and explicitly refuses to treat its biases as the norm from which one has to justify departing. He demands the opposite, that neoliberalism justify its ideas and its human outcomes. That is something it is rarely successful at doing.
Human outcomes, in particular, neoliberalism deems irrelevant, something one would think is anathema to a legitimate social science. But by all means, continue paraphrasing Mr. Lennon, since you have much in common.
Neo-liberalism doesn’t deem human outcomes irrelevant. It is very big on prosperity and freedom of action, both of which matter to people.
The prosperity and freedom of action your neoliberalism concerns itself with “belongs”, so to speak, to a very small group of capitalists. Everyone else is a consumer, whose choices range from A to B.
You sound like the private insurance advocate who bemoans government regulation because it might lead to rationing access to healthcare, but who venerates private capitalists’ restrictions on access to healthcare because they escalate profits.
I gather you’ve never lived in a country whose choices were restricted to C by the government. It is substantially worse …
Whoo boy, I “gather” you have not been here long
For starters, the point of neoliberalism and capitalism as currently practiced is to insure that capital is protected and rewarded, regardless of the costs to individuals, society and the planet. Maybe we need a different point for our economy.
You are not the first person to propose this. And some alternatives to market economics have been tried. The results have been worse than what you are criticizing.
Hey, I’m open to alternatives, and would not object at all to people (voluntarily, together) changing their priorities. But the usual policies that follow attacks on neo-liberalism as a method or tool of accomplishing social goals mostly lead towards tyranny and poverty.
You mean like the tyranny and poverty that comes to the many from unregulated capitalism? That tyranny and poverty?
At least you admit that neoliberalism is an intentional social policy whose outcomes are desired by its promoters.
Where is this “unregulated capitalism” of which you speak? I know of no country whose system matches this description. And that isn’t really what neo-liberalism is, in any case.
Yes, of course it is a deliberate social choice, as is adopting systems to bolster other forms of freedom. As is the choice to adopt the alternatives. Countries have chosen the alternatives, and we could as well.
Poverty hasn’t decreased in those countries …
“bolstering other forms of freedom”
Another tell… using “freedom” in this context.
Freedom has contexts now, does it?
Markets were here as long ago as we have any written record. Herodotos talks about markets in Central Asia at least 2500 years ago and we know there were markets long before that. That doesn’t make the Babylonians or the Greeks or the Persians capitalists. Those are two completely separate ideas.
It’s nice of you to allow people to change their priorities. One priority I want to change is the principle that capital must be rewarded regardless of the damage it does. Setting up the rules to privilige returns to capital and its steady increase is a terrible idea that needs to be rooted out of society.
And who the hell cares who was first to propose something?
It doesn’t matter who the first to propose it was. What matters is what happened when it was implemented. It was considerably worse on most of the dimensions you are worried about and catastrophic on others.
Of course, I don’t know what you are exactly proposing, and I’m sure there are many, many proposals we agree on (investment in infrastructure, for example). But so far, your attack on neo-liberalism sounds like a call to old-fashioned socialism, which has a long sorry history, and a very unflattering present.
d4d1v is getting close to it with NeoFeudalism. You gotta plug in “increasing returns” by the guy who helped start the Santa Fe Group. (tip of the pin to the PHD guy commenter here at emptywheel for bring that to my attention) It seems to be about the only real thing to come out of it.
Increasing returns gets about as close as you can to where we are by completely demolishing the old outdated equilibrium traditional markets.
https://hbr.org/1996/07/increasing-returns-and-the-new-world-of-business
All of that is from 1996 as he formalized it in public.
But all this is such academic stuff… and I will not bore again with my superstitious USA has infected science, and the 17th century Invisible Hand is just another incarnation of the little baby watching over us.(just a little)
Anywhoo… I am more concerned as Marci seems to be about how Trump “leaves”. He could take the world down as he sees his own world going down. He looks worse and worse. When he tried to grab the spotlight away from the Dems swearing in when he walked into the impromptu “news conference” and a reporter wished him a happy new year his reaction was of genuine thanks. He is carrying some big fear now. He should be. Mueller. Scary shite.
What??
I hope your reference to PayGo is a hint that you’ll be exploring Modern Money Theory (MMT) as a core element of the new ideology that’s needed to undermine neoliberalism.
PayGo is rooted in the extremely consequential fallacy that a sovereign, currency-issuing government must manage its finances the way a household (or a US state) has to. Households and states have to earn, tax, or borrow to cover their spending, or else go bankrupt.
For a government that issues its own fiat currency (no gold standard, no guaranteed convertibility to another currency), affordability is never an issue. Such a government can purchase whatever is offered for sale in its own currency. The fiscal balance is a residual of no importance in itself.
MMT explains that government’s job is to balance the *economy,* not the budget. Spending is constrained not by tax revenue, but by the real resources available. If there aren’t enough doctors or hospitals, for example, too much health care spending would cause inflation.
PayGo is much deeper than a tactical political failure. It’s rooted in a misconception, a myth, about macroeconomics. That myth sustains neoliberal ideology, so it’s fiercely promoted by one-percenters and their acolytes. Nancy Pelosi and the Dems have been co-opted at the level of macroeconomic fundamentals.
Taxes for Revenue Are Obsolete is the title of a 1946 article by none other than former chair of the New York Federal Reserve, Beardsley Ruml (Google). Quite a radical source, right? How does that square with PayGo? Not at all.
Economist Bill Mitchell blogs extensively about neoliberalism’s intimate connection to the fraud of mainstream macroeconomics. He’s also thought a lot about how to use framing and metaphors to undo the PayGo mythology we’re living inside.
Looking forward to the rest of your series.
But of course MMT is nonsense. Essentially, all it says is that governments have a great capacity to inflate away its debts. Weimar Germany and Venezuela both practiced MMT.
And I think that blanket statement is just as much nonsense. MMT is not completely the antithesis to debt realization or existing monetary theory. It is a different view/perspective of it.
To make it one or the other is complete bullshit. If you would like a realist, look to Stephanie Kelton. While I may not always agree with her (and she is a friend to this blog), she is incredibly smart and literate on this issue and her views have merit. Take a hint from “Richard G” above.
It is either a different articulation of standard monetary theory (and thus adds nothing new of substance), or it is an unsound theory.
As I read the original sources, I think it is the former. When I read commentators who’ve picked up the theory as an end run around budget constraints, I think it is the latter.
Again, I think there are differing views on this and the answer is not easy. But when you have read the works of Ms. Kelton and can critique upon that, rather than blowing general shit out of your ass, get back to me.
I’ve read her. The theory still has the same weaknesses. And other countries have tried it, to varying degrees. The results have not been pretty.
And your response is still intellectually thin and not particularly responsive to Ed’s post. But thanks for suddenly trolling by.
All you’ve done is name-dropped. You haven’t engaged on any of the issues, nor refuted anything I’ve said.
So, speaking of trolling …
What countries have “tried MMT,” pray?
In the sense of perpetual printing-pressed financed deficit spending? It was popular in Latin America back in the 1980s. Venezuela has just taken a run at it.
Here’s your tell: you said “MMT is either X or it is Y and if it’s Y it’s wrong.”
@Bmaz was very gracious to you. More than you deserve.
MMT completely ignores the mechanisms of the monetary/banking system as it exists now, down to the most basic level. At least every simple summary I have heard put forward. For instance the Fed is not the government. The Fed can only and will only ‘print’ money, that is create a bank deposit, in return for the sale of an existing debt. The Treasury could take all it’s gold to the Eccles building Monday morning and say, ‘deposit this in our account’ and the Fed would go, ‘huh. Same with the trillion dollar coin. There is no way currently under law or systematic practice to monetize anything but debt. None. Nada. Zilch. No amount of stomping of feet and holding of breath can make it so.
Now if you want to talk about changing the monetary system via legislation then fine. Let’s hear a plan.
I’ve read Modern Money Theory by Randy Wray, a reasonably accessible textbook. There’s a chapter on hyperinflation and other bugaboos. You don’t know what you are talking about.
In its `rigourous’ form (rather than the one being expounded here) MMT is just a simple (or rather simplistic) version of the Keynesian notion that when a country is away from full employment, deficit financing can be used to bring it back into full employment. That premise is mostly uncontroversial, and the MMT treatment glosses over a lot of elements that are in a more rigourous Keynesian analysis.
What is being expressed in these comments is more on the side of the government can use printing presses to almost fully replace taxation in any circumstance. This will generate inflation, and followed to its logical extreme, hyperinflation.
Yes, Wray and others do pay lip-service to this fact, but their models don’t really have a process for inflation, so their claims amount to a lot of hand-waving.
Countries that have difficulty raising taxes have tried perpetual money financed deficit spending: it was popular in Latin America back in the 1980s, for example.
LOL, this is fucking hilariously dumb. You have no idea what you’re talking about, you’re just repeating some dumb libertarian bullshit
Haha, Willis, you are one of my favorite commenters.
From the perspective of a systems engineer, the first step is to define the objective function (the well-being of all) and the last step is to have a feasible execution plan.
My problems w/ MMT are (1) that the theory doesn’t address income inequality; (2) doesn’t the debt have to be paid back sometime; and (3) inflation will rear its head and exacerbate problem #(1).
The reference materials, as well as the articles and the comments, make this a serious learning space! I’ve watched a lot of videos recommended by this EW community—thanks!! And, Ed, keep it coming—the series on capitalism was very informative.
Thanks. The beginning point of MMT is an accurate description of the creation and use of money in a capitalist system. It is neutral on political matters. In Wray’s book there is an explanation of the way MMT can be used to achieve progressive aims. But he points out that it can also be used to achieve conservative ends.
Tommy, your question about whether MMT would alleviate income inequality is kind of misplaced. MMT is not a policy regime. (as Ed W says below) It attempts to describe the real capacity of a sovereign, fiat-currency issuer. How that capacity gets used is a political decision.
The point is that to work our way free of the neoliberal box, we need to understand what we are capable of in financial terms.
And that’s what I think makes MMT so relevant to Ed Walker’s challenge to neoliberalism. MMT untangles the web of self-imposed constraints such as the Congressional budget rule requiring new spending to be offset with new revenue or spending cuts, i..e. PayGo. Such self-imposed constraints are masking our potential as a society. They are not inherently real.
The federal government doesn’t have to tax or borrow in order to spend the dollars it alone can create. Because we mistake self-imposed constraints for economic verities (with constant reinforcement from mainstream economists, media, politicians), the self-imposed constraints generate a mythology of money scarcity.
IANE (I ain’t no economist). However I think no MMT economist would say that Treasury bond issuance is necessary to “finance” expenditures. Stephanie Kelton and others do say Treasuries may be needed for global financial market stability, but that’s a different matter.
As for whether continuous fiscal deficits accompanied by bond issuance would eventually overwhelm the federal budget with huge debt service obligations, I think the answer brings us back to appreciating the immense capacity of a sovereign fiat currency issuer. MMT explains that by virtue of its money-creating capacity, the Fed can set interest rates on Treasuries wherever it deems appropriate. And it can also buy unlimited Treasury bonds from investors if necessary to reduce Federal debt service requirements.
“Unlimited” sounds crazy and reckless. But we’ve already seen the Fed act on a scale larger than the sum of Treasury bonds now outstanding. Levy Institute research (summarized by Randall Wray) found that the Fed committed more than $29 trillion in loans and asset purchases to rescue the global financial system after 2008. Inflation stayed below target levels.
Subject only (and crucially) to the productive capacity of the real economy, our society can afford to buy what we collectively decide we need to have.
PS Ed Walker says above “many Democratic politicians, including Hillary Clinton and Joe Biden, are neoliberals”
Check out Bill Mitchell’s video, Most Progressives Are Neoliberals in Disguise (41 mins) https://www.youtube.com/watch?v=sOMo3xuSyWM
MMT theory basically says that governments that print their own currency have a limitless capacity to inflate away their debts*, with a footnote saying “*but not really limitless.”
Regarding MMT, my understanding is that they say a government that prints its own currency has to reason to have debts.
Well, governments that print their own money can always meet the literal terms of their own-currency debt contracts simply by printing more money. So they can never have a debt crisis, like the one in Greece.
What they do have is currency crises, and inflation crises. They also have problems getting anybody to lend them real real resources in their own currency.
No reason to have debt, is what I meant to type. Why should the government prop up a largely nonproductive finance sector by borrowing rather than printing? Other than habit and tradition.
The financial sector is important in allocating private sector investment, so it would exist anyway. Straight printing would lead more quickly to inflation.
That’s utter nonsense. After the Great Crash the Fed made enormous piles of cash available to banks to lend as well as to stabilize the fraudsters who created the crisis. Banks didn’t lend, and to my certain knowledge cut off credit to sound businesses causing them to become bankruptcy clients for me. Banks are lending into the fossile fuel industry, which is disastrous for the planet. Your pollyanna views of banks ignore their crimes and their regular contributions to recessions and crashes.
This statement is self-contradictory. Banks are now lending again to sound businesses (and not just the fossil fuel industry). That’s good. When it wasn’t happening, as you point out, it was bad.
There are two different statements here: (1) we need a well-functioning financial sector; (2) our financial sector wasn’t functioning well. I’ll stipulate to 2). You appear to be saying (1) is utter nonsense, that we don’t need one, and then pointing out all the bad things that happened when things went awry.
Unless you are actually saying that we would be better off if the government allocated investment, in which case I would point you to the countries that have tried and are trying that model and ask you to explain why you want that for America.
There are some technical reasons that issuing debt rather than just handing the money out has advantages.
Hayek didn’t believe in markets any more than Mises did. There is no neoliberal ideology beyond private property. Market contractions are, for the rich, an opportunity to buy at a discount. Recently, there’s been an attempt to inflate Hayek’s influence (see the Hayek vs Keynes crap book). It’s interesting that the Nobel prize given to him was shared with a socialist. Anyway, none of Hayek’s predictions about mixed market economies have come true. None. Libertarians won’t admit this. In fact, the Chinese style of capitalism completely destroys their arguments, as totalitarian regimes are ideal for capital accumulation. Gov’ts need only to allow the illusion of a better life to maintain the facade.
The libertarian/neoliberal/laissez-faire argument, therefore, is dishonest at best, and propaganda at worst. Fascism is the inevitable result of the rich holding onto their lot and bribing politicians to maintain their wealth. Hayek was fucking wrong about that, and he’ll always be wrong no matter how much bullshit the Kochs fund.
There’s a much stronger argument that a nation’s resources determine its economic standing much more reliably than its economic ideology. Economic ideology only dictates who gets a bigger piece of the pie.
Concise, useful argument. Thanks!
As for pies, slices of. The gaze of us working people is directed to focus on trying to get a bigger piece of a rotten, shrinking pie. As if there weren’t tasty delicacies stashed in the expensive refrigerators of the wealthy. Nor are we supposed to wonder what increasingly disrupted ecosystems will mean for the pie filling supply.
“The End of the Corporate Age”….https://www.youtube.com/watch?v=aeFDOIh9B18&t=23s
Reply to Tommy D Cosmology:
Your first paragraph is harder than you might think (the system isn’t closed, innovation isn’t predicable, human wants and desires aren’t predictable either, etc.)
As to MMT, the jobs guarantee/government as employer of last resort does impact inequality (and although it seems at first glance to be a kludge added on after the fact, it is actually a natural result of the program, but you have to read some of the more in-depth literature to see why that is so). The reasons for taxation also impact inequality. For (2), a sovereign government that issues its own currency can always pay debts in that currency (simply by issuing more currency). That doesn’t cause inflation (3) although under some circumstances (e.g. if you owe enormous debts, only payable in gold, to other countries, and your manufacturing ability is completely destroyed, and you have to buy food from other countries, and you combine that with printing more of your currency because the other countries don’t want to take it in exchange for food and goods (c.f. Weimar Germany)), you can get massive inflation. But printing money to cover government debt in a sovereign currency does not lead to inflation on its own. Inflation is poorly understood in part because economists are informed by ideology and also because it’s hard to do experiments with nations and national currencies.
Read about MMT in works by proponents of the theory (e.g. Randal Wray, Stephanie Kelton, Bill Mitchell, Warren Mosler). Their critics don’t seem to take them seriously enough to engage them in honest debate, so misrepresent their views (by all means read criticisms of MMT, just don’t take the critics’ characterization of MMT as reliable).
Printing money to cover unlimited debt doesn’t lead to inflation? Or only in certain rarified circumstances? Really?
I think you’ll find that it has led to hyperinflation in any circumstance. The amount of real resources governments can mobilize through the printing press without causing inflation is about 5% of GDP.
You appear to object to deficit financing followed by printing currency to pay for the resulting debt. If so that is not what MMT teaches. One can run deficits so long as all resources are not employed, e.g labor. Once those resources are fully employed creating further deficits can lead to inflation. (notice “can”) So you might ask how come we don’t have an inflation now with a deficit and full employment?
Well good question. You may have noticed the central bank has been increasing interest rates to try and reduce demand inflation. Seems to be working, although Trump objects, poor devil.
But note that when aggregate demand is not employing all resources the result is a recession and then the typical Keynesian response is deficit spending, like Obama did in 2009. MMT approves. So deficits are not all bad, and paygo is arcane and best left at the door. Let the progressives like AOC see what they can create.
I don’t object to deficit financing as a method of stabilizing the business cycle. This is hardly an MMT invention, however.
What is being discussed here, as far as I can see, is printing money as the method of funding the government, regardless of the business cycle, which is another issue.
No MMT-knowledgeable person, in the history of the universe, has ever asserted anything like, “… and we can just print money to cover unlimited debt without any inflation.”
No, but as far as I can see they don’t incorporate the mechanism by which it is ruled out. They just say something like “of course, I’m not saying that …” and that’s it.
Government can create 0% effective unemployment while addressing the huge environmental problems we have.
That statement is probably true. Just not in the way I think you think it is.
Good gawd, THANK YOU for coming to rescue the mistaken thoughts of those here at this blog.
And, to think, you have done so over a (let me check yer time stamps) a whole interaction period of less than one 24 hour day. Well done!
As a long-time reader/participant of this blog, I find Jay’s comments refreshing and well-reasoned. During the 2016 elections, MMT made its entry as a hail-mary form of divine funding when Bernie say couldn’t figure out how to pay for his largesse and wild promises. I largely came to the same conclusions as Jay, but don’t have economics chops to express it as well.
My 2¢, adjusted for inflation.
@Desider When I read “That statement is probably true. Just not in the way I think you think it is,” “refreshing” and “well-reasoned” aren’t the adjectives I’d pick.
Sure, but Jay made a dozen other non-flippant, reasonable comments (and some of the retorts are a bit noxious).
Right off the bat, he admits he doesn’t know much about MMT, then proceeds to make a ton of inaccurate statements about it.
He abdicated the title or “Reasonable Poster” with that post.
He’s here to spread FUD. Have you really never seen that kind of rhetorical, ummm, device before?
I think you mischaracterized ize his comments and could accuse you of simply attacking the messenger rather than debating his statements.
This is probably not the place to discuss it but there is a way to eliminate unemployment forever. It is called the government job guarantee. That crazy socialist AOC even proposes we set it up. The way it works is the feds hire anyone who is unemployed. Sort of like FDR did with the WPA and CCC. Now the idea is to pay them a min wage and so when the economy picks up employers have a ready made work force, except they would have to pay a bit more than the min wage. Bye and bye this is an outgrowth of MMT.
Actually, they’d have to pay less than the minimum wage for it to work.
Assumes facts not in evidence.
It assumes you need some way (incentives) of reallocating workers to the private sector when the time arises.
Trying to conflate MMT with Marxism I guess, by working in the “allocation” word. Another old rhetorical trick.
Nobody is allocating anything. When the private sector is booming, they compete to hire someone they need, just like it’s always been done.
You also didn’t explain why they’d have to be paid less than min wage to make it work… but of course that’s complete bullshit so maybe that’s why.
It’s true that if the minimum wage isn’t binding, then it won’t be an issue. But in the case of a binding minimum wage, what would compel workers to leave the government job they have for life for another equally paid private sector job that they could lose?
I love emptywheel for its Mueller coverage, but this post is off base.
The view that our current system is “capitalism with few constraints” is inaccurate. There are lots of constraints (for the good) and we add more when we the need arises. Some of the “constraints” include the pollution regulations that have resulted a much cleaner environment and workplace safety regulations that have resulted in a huge drop in occupational injuries. (These improvements are contemporaneous with the period that that poster associates with neo-liberalism.) We also have vastly improved access to the stock market. It is inaccurate to say that capitalists are a few rich individuals. The truth is that millions of Americans own shares in our largest corporations through their 401ks. And consider the thousands of Microsoft millionaires: workers at Microsoft that became rich due to stock that they received as part of their compensation. Marx is not so much wrong as simply out of date. The world has changed and mostly for the better.
We still need further improvements. We need a vastly more progressive tax structure. We need Medicare for All. We need to expand free education from K-12 to K-16 and further. But all these improvements are much more likely to be accomplished within our current economic system than by replacing it.
I agree with you. There have been many experiments rejecting “neo-liberalism” over the last 100 years, most recently in Venezuela, and to a lesser extent, Argentina. Tellingly, “socialist” governments in Latin America that worked within the market economy framework have done far better for the people they wanted to help than either of those two countries.
If you are looking for a criticism of capitalism, read your last paragraph and ask yourself why we do not have it all today? We are the wealthiest nation on earth but somehow we can’t manage to pull off single payer health care or free college education when those are at the top of human and our nations needs. this economy is lopsided. The wealth is at the top only and relative to the rest of us they pay very little in taxes. Could it be their influence prevents us from moving ahead?
Social struggle is hard. But how many African Americans would want to go back 50 years? How many LGBTQ folks would want to go back 50 years? How many transgender folks would want to go back 50 years? If the current system is so horrible, how do you explain these advances in social justice?
There is more work to do for sure. We need to keep with the struggle. I am not saying the forces against progress are zero, but tremendous progress has been made in the past 50 years and future progress is more than possible. I am sympathetic with the depression brought on by the horror story of Trump. But that is a short-term vision. In the past 50 years, we have seen tremendous advances. I come to this site to read Marcy’s tremendous reporting and to cheer on Mueller. I think there is reason to be hopeful that Trump will be gone by the end of the year.
Perhaps you are so thrilled with the economy you missed the massive deregulation that began with Reagan and has continued until the present, or the increased concentration across the economy or the declining labor share or the rot in our infrastructure. And perhaps you haven’t noticed that the fossile fuel industry is killing the planet while preventing change.
I am fully aware of the deregulation. Are you aware of *new* regulation such as SOX? I am not saying saying the picture is fully positive rather it is not fully negative as your post implies.
The question is not whether there are improvements and advancements that need to be made but rather what is the best approach. Your post neglects to make a case for why a replacement of the current system would work better.
By ignoring all the positive things that have been accomplished in the past 40 years, you make it sound as if there isn’t any trade-off involved. By ignoring the positive accomplishments, you make it sound as if future accomplishments are not possible within the current system.
Well that sure defeats the idea that regulation and enforcement haven’t fallen into the toilet over the last 40 years.
@paul deuter
The scales need to fall from your eyes. Read Quinn Slobodian’s recent book, “Globalists: The End of Empire and the Birth of Neoliberalism” (https://www.amazon.com/Globalists-End-Empire-Birth-Neoliberalism/dp/0674979524).
I just read the summary of your suggestion on Amazon. I probably agree with that book entirely except that it only views one side of the equation. There are definitely bad things happening in the world but there has been a lot of good things in the past 40-50 years as well: Poverty, worldwide, is in decline. Violence, worldwide, is in decline. Hunger, worldwide, is in decline. Life expectancy, worldwide, keeps going up and up. These are not small things.
The two main complaints, apparently, that your book highlights are inequality and social injustice. In both of these areas, we definitely need to do better, but our current system has us on a downward trajectory. There is much *less* social injustice today than 40-50 years ago. How does the “everything is rotten” theory explain those advances?
The book is a history of the roots of globalism and neoliberalism and brings to light a number of little-known facts about the economic philosophy.
The point is that our political entities–which citizens have a hope of controlling–are being supplanted in areas of economic governance by non-accountable organizations.
And the real hard-core aspects have essentially zero regard for the individual as a worker.
So don’t get too comfortable.
Ideology comes second to very primitive, animalistic, fight-or-flight instincts to look out for number one and to be on alert about “others”.
Ideologies stick because they justify one’s position on the empathy scale, and this is why they are very emotional, very powerful, very “sticky”. I agree that groups within a society reinforce the verbiage of common ideologies.
By definition, a conservative point of view is one where the concern for others is subjugated by some other concern or ideology.
Go ahead, give it a try. Take any topic of importance and the conservative point of view (or policy) and ask yourself “Where does the concern for others rank in the list of factors considered?” Things like small government, and personal responsibility, are easy if you have no empathy and are just greed and prejudice repackaged.
Free market ideology is just an excuse for greed, but it is often taken as given, like “the ether”, or as a mystical force, or even as “fair” and “natural”, as in Darwinian.
My strategy: the greedy bigots need a political party, and will solidify in that group by us naming and shaming them all the time. All we need is for a few others to feel uncomfortable about being Republicans and to accept neoliberalism as a transition to start exercising empathy. They can’t make the far jump all at once.
For the rest of us, we need a practical plan to implement that leads to better outcomes for all. Still not clear how we start.
Senator Perdue (R-GA) had a WP op-ed yesterday where he said that conservatives are against single-payer health insurance. What they are not for is the well-being of all. Their policies are bad because their ideologies are bad because their values are shitty.
I’ve been hearing conservatives whine on CNN evening shows that they are being bullied and name-called. We should take caution, but I still say pile on.
“Ideologies have meaning only when articulated.”
Linguistically true, I suppose, yet it may be more accurate to suggest that ideologies (those which are articulated) only have, in a performative sense, “meaning” when acted upon.
Thanks, I’ll think about that.
This follow up is beside my original point, which is meant seriously in regard to the sentence I highlighted, but your response to my comment—welcoming, open, and civilized as it is—makes for a beautiful ironic, sharp punchline to my comment. I’m thinking of George Carlin, and “thinking about it” as an “act” in response to speech. You made my night. If you ever think of writing jokes with a partner let me know.
Just a few thoughts from an old lefty trade unionist. I find the use of the term “neo-liberal” to describe most Democrats to be both inaccurate and a divisive slur that divides people who should be allies. Friedman’s neo-liberalism was, and continues to be, an attack on any state interference in market relations, and for dismantling of the social democratic reforms under capitalism that uses the power of the state to soften the excesses of unregulated market capitalism. Chile under Pinochet being exhibit one of his views.
Most Progressives and Democrats in general reject Friedman’s ideas, but that does not mean they reject capitalism or the use market forces. There are a growing number of self-described “socialists” within the Democratic Party ranks, but they are as of now very few in number. Bernie Sanders and Alexandria Ocasio-Cortez being the only two openly “socialists” elected to date on the national level. Sanders’s affiliation with the Democratic Party being less than constant. While the new found acceptance of socialists in the Democratic ranks is a good thing, it is by no means the same the acceptance of socialism. Even the ideas advanced by Sanders and Ocasio-Cortez are not fundamentally socialists. There is no discussion in the platforms put forward about what a Socialist USA would look like, and certainly nothing about a change to social ownership of the social means of production. No, the platforms are about need reforms under capitalism.
It is a mistake, imho, to then lump the most of rest of Democrats in this category of “neo-liberalism” with Friedman’s views. The Clintons, Al Gore, Joe Biden, etc. are all traditional US Liberals, and, yes, Progressives, who view saving the reforms of the Progressive Era, New Deal, the Great Society, and other reform programs under capitalism as vitally important. That does not mean that supporters of those reforms ever were categorically against the use of market forces to bring about new reforms. Obamacare is a good example of this, and it is supported by the overwhelming number of Democrats, almost none who would call themselves “neo-liberals” or want to get within spitting distance of Friedman’s views.
As an old fart, here are my two cents in this discussion. Don’t call people names they don’t call themselves, especially people who one needs as allies. That’s coalition building 101. Particularly important when the political focus should be getting rid of the wannabe fascist dictator in the White House. Secondly, if you can’t tell the difference between the politics of Milton Friedman and those of Hillary Clinton then perhaps the problem is in your analysis.
I don’t see anyone in the room who would confuse Friedman and (either) Clinton, or Obama for that matter. But:
ACA is actually a neoliberal health care solution. It was devised by the Heritage Foundation a couple of decades ago. It relies on market solutions (50 of them!) which is a key part of the neoliberal theology. And I think both Clintons and Obama were in favor of it.
I’d be careful about claiming too much support from the Clintons – they’re team players, and after Hillary’s loss, they weren’t going to kneecap Obama on this, however his plan & his approach to passing it differed from Hillary’s style. This also left her holding the bag for other Obama mistakes, as women don’t get to question their predecessors without appearing catty, whereas men are expected to do it to show their independence. [putting Hillary in the State Department – where she wasn’t even allowed to choose her own deputy – was a great way to sideline any domestic influence for 4 years, largely taking her out as a potential rival in 2012]
There’s a lot of wisdom there, but I think we have to understand the process of changing society begins by staking out positions in opposition to those whose views we think are wrong. As I said, any Democrat is a better choice than any Republican. But not all Democrats agree on basic principles. The starting point for any policy choice should be its contribution to making people’s lives better directly. Democratic neoliberals argue that the bast way to make people’s lives better is through markets. At best markets might make people’s lives better as an indirect outcome, and that only happens in certain kinds of markets or under rigid regulation, as, for example, health insurance companies in Switzerland or the telecom companies in France. You don’t hear Democratic neoliberals arguing for the latter ever.
Ed, I want to thank you for this thread. The comments are amazing. I’m interested in the nexus of idiology, social pathology. Historically microorganisms: virus, bacteria, fungus, parasite, caused infections threatening society. Microorganisms were first proven to exist by Louis Pasteur’s experiments in 1880’s. Modern man and societies have newer threats like: ideologies. Historically how have we survived these threats? Education. 1900 through 1922, every year, Tuberculosis was one of the top three leading causes of death in US. (.DEATHS AND DEATH RATES FOR LEADING CAUSES OF DEATH: DEATH REGISTRATION STATES, 1900-1940; https://www.cdc.gov/nchs/data/dvs/lead1900_98.pdf.
Tuberculosis infections are caused by contact with Mycobacterium tuberculosis. NOTE 1940 death by tuberculosis drops to seventh leading cause of death. Why? Education. Antibiotics weren’t invented until 1943. Did human immune systems evolve in 40 years 1900 to 1940 to fight Mycobacterium? No. Pasteur’s experiments lead to public health education programs door to door by public health nurses and 90% decline in tuberculosis infections.
What I’m suggesting is Ed’s thread is on to something that is infecting our society and while some: ideologies, corporations Cambridge Analytica, Facebook exploit status quo progressive organizations, blogs EW are actively fighting to reduce threat with threads to combat infectious, ideologies, corporations, area men.
I’m not especially informed or articulate about economic theory so I’m looking forward to following this project. Thank you for establishing it.
I do pay attention to phrases used by politicians and noticed a phrase twice used by Nancy Pelosi in as many days. Both, in her Speaker of the House speech and in the town hall interview she did with Joy Reid, Pelosi suggested that the goal was to establish “an economy that works for you”.
From her speech…
We have heard from too many families who wonder, in this time of innovation and globalization, if they have a place in the economy of tomorrow.
We must remove all doubt that they do, and say to them: we will have an economy that works for you.
That’s a formulation I hadn’t heard before and fits with the specific emphasis she placed on the middle class in both of those contexts.
Uncertain if my hunch is correct, but it seems to me that the conscious use of that phrase does hint at a different and explicit criterion for evaluating the empirical outcomes of various types of macro politico-economic ideologies and policies.
Does the economy work for enough people to 1) convince them that the economy works in a way that is on their side, and 2) establish empirically that a larger and stable middle class exists?
Will appreciate feedback about how this hunch.
@Ken Muldrew
The Austrian School did not invent free market thinking. That is the inevitable conclusion from Adam Smith’s bible ‘The Wealth’. The Austrian School just stripped about everything out except Smiths “Law of Markets”. see my post above. Smith had an obsession with monopoly but not within its current context. Smith wanted the removal of the trade monopolies given to the aristocracy by the King, he had no such problem with the tobacco monopolies built by the Glaswegian capitalists of his own class.
Smith’s project was to justify John Locke’s theory of property and to transfer power from the landed aristocracy to the new property (capital) owning Presbyterian Whigs.
I think your reading of Smith is completely mistaken. Smith saw markets using cash transactions as a utopian ideal meant to free the poor from debt peonage and misery. He was mistaken, but utopian dreams never seem to turn out the way their originators intended. Smith saw humans as social animals above all and could never have imagined the libertarian individualism that now worships the free market. Read him again as a child of the enlightenment who leaves unsaid much that was taken as too obvious to mention at that time (but has now become unfashionable). In fact, start with the Theory of Moral Sentiments and keep in mind that it is the same person writing On The Wealth of Nations.
I’m not sure why you bring up the Austrians as I was talking about the equilibrium theories of Walras and Jevons.
@jonf, I think Deuter was simply pointing out the ability of our current system in general to provide these things without a new theory – that Europe has a good deal of it is evidence. And we’ve always had to fight back against the rapaciousness of the most successful companies and individuals and their inevitable heavy influence. Antitrust was just one mechanism, unions were another, but the players learn how to game things and new mechanisms are needed. I’m also struck by how atavistic the US environment is vs Europe overall, this new round of GOP-applauded game of chicken as just the latest example. My point being, taking the proofs and criticisms from the US system only distorts what the system is capable of and how saner people might run it. And Deuter gave plenty of recognition as to areas that could be improved – within the system or with a new one. Managing the too heavy current 1% influence (and in my eye, reorganizing how we think of distribution) is a pressing current task.
As you look into neoliberalism (I’ve mentioned Slobodian’s book) you may be surprised to find the situation is rather more dire than that.
@Ken Muldrew
No, I actually agree with you. I clearly see Smith as a child of the Enlightenment, his work resonates with Enlightenment ideology, but read his thoughts on the women of the highlands, his misogyny is palpable, and this during the clearances. Its really hard to make sophisticated arguments in a short thread post. I have just spent the last year re-reading all Smith’s published work and the three (quality?) biographies that are extant. He left very little personal correspondence, all his personal papers were destroyed at his request. Some of his letters remain but they are not published.
I have spent three decades trying to understand social systems as complex systems. consequently I interpret the economy as a type of complex system. Bertalanffy’s isomorphic law of systems informs me that thinking of the economy as an equilibrium system must be incorrect and so I have gone back to Smith in the original to better understand the implications.
Fair enough; you can only say so much in a blog post. The important point is that Smith saw social norms as very important for regulating individual behavior. His idea of “self-interest” was very different from the neo-liberal view.
@SFDanny —
In general I think you’re right, there’s a huge difference between the GOP and the Democrats, and even the more right-leaning Democrats don’t really qualify as neo-liberals in the economic sense.
But there’s a risk in ignoring the sympathy for neoliberal ideas among some Democrats. Bill Clinton is probably the most notorious example in the US. His installation of Rubin and Summers at the Treasury Department and the strong push all three made for deregulation of financial institutions is a major cause of the economic messes we’ve been facing for almost two decades. Obama was much too willing to listen to Summers with regard to the size of the financial stimulus, and nearly nominated him to be Fed Chair until most Democrats rebelled.
To his credit, Obama was far more skeptical of neoliberalism than Bush, and put a damper on the worst excesses of the financial industry. He backed the CFPB and threw his weight against privatized higher ed and predatory financial institutions. But he also sided with Summers and Geithner to take it easy on the leaders responsible for the 2008 crash and slow the pace of Wall Street regulation, and missed a major opportunity to push the DOJ to ramp up enforcement of white collar crime.
I think the new crop of US Reps is an encouraging sign because they show a willingness to organize around ideas in a way that Democrats have not done in the recent past. That kind of void is what allows neoliberal ideas to infiltrate Democratic institutions. And I should note that I think there is a critical need for mainstream economic thinking in the Democratic party. The debate should absolutely consider issues like inflation and private investment and savings rates. The danger is when these issues are only seen through the lens of how they are tied to the interests of the super-rich and mega-owners. They’ve dominated the debate to a large extent because there was so little pushback by mainstream liberals, but hopefully that balance is beginning to change.
none of this really matters. how will it change poverty? how will this change mass shootings? How will any of this provide for decent health care or bail reform? Its fun as an academic exercise to discuss neo liberalism or liberalism, etc. but truly most people don’t care because it doesn’t change anything. It doesn’t help people deal with the problems in their lives, which are usually based on the lack of wealth. As the old saying goes, the difference between being classified crazy or eccentric is the size of your bank account.
It doesn’t matter if Clinton was a neo liberal or not. The “senior” Democrats have made it, in terms of money. They like the position and they’re staying with what got them there. The “new” Democrats, those newly arrived, those who stay with it, will become just like the “senior” Democrats of today, and some would then refer to them as neo liberals instead of liberals. Its the difference between having made it and wanting to stay there or not having made it.
Would we describe Bernie Sanders as a liberal, conservative, neo liberal, or just a cranky old white man who found something to run on and ran on it so long he began to believe it.
In my opinion there is little to no difference between a neo liberal, liberal, socialist, or conservative. In Canada we used to have a term to describe conservatives who wanted social programs–Red Tory.
its all very nice to discuss all these theories, but really. It all boils down to the same thing, them that has, intends to ensure they continue to have. Doesn’t matter what name you attach to it. People are, in the main about greed and guilt. they will give up a little greed to feel a little less guilty. Some where in between we may find the difference between neo liberal and liberal.
I think it matters deeply. The anti-intellectual argument is BS.
If we don’t discuss these issues we will never expose the paucity of thinking that envelops the idiocracy. Here at EW we have a wonderful mix of different opinions and this is wonderful.
Of course I will always have intellectual differences with lawyers and economists. The debate is important, opinions are important, and this site is special because irrespective of one’s opinion, most on this site seem to be informed. Even when we disagree fundamentally…
Beautiful. Mr. Radical, I find your commentary on systems usually prosaic, but nonetheless, I find I always learn something. Thanks and Peace!
Once was a time I thought I understood economics, in terms of Friedman, Keynes, Smith, the Physiocrats, Monetarists, et al. I took assorted economics classes and college accounting.
Years went by and eventually after an unfortunate experience with forensic accounting, I began to believe that money, banking economics, the whole manifestation of business, operated as a closed system that ignores the finite world in which it exists. My first clue was having to come to terms with the effects of theft on the system and then the inability of the system to account for or deal with its externalities, eg. pollution.
Then resource depletion and the ultimate pollution, greenhouse gasses, came to my attention. Then I came to believe that the economics systems we know all must grow or die. Some say that the growth must equal the aggregate interest on outstanding debt so that there is enough money generated to service the debt. Others say this is bull. It makes my head hurt thinking about it. My wife put up a fridge magnet with a picture of a youthful Sarah Palin saying “Thinking gives you wrinkles. “ I concur.
What is clear to me is that any new or modified economic system must account for a finite resource base and eliminate the negative effects of externalities.
Perhaps money is not an adequate measure of the market. I began wondering about this after seeing Helena Nordberg-Hodge’s film “Ancient Futures: Lessons from Ladoch”. She is an anthropologist who followed the Ladockie people for over 20 years as they were assimilated into the Indian Economy.
By the measures of western economists they had become much wealthier as GDP in dollars had gone way up. But as the film shows, in terms of human well being they were much the poorer for their advances.
I do not know how to fold this story into PAYGO but I do know that much of what passes for economic policy will fail us in terms of human well-being. How do we fold the arguments of the past into the needs of the present and future? You all are taking a good shot at it. Keep it up.
Awesome discussion. I have read Kuhn, Benjamin Whorf, Korzybski, a little Marx as philosophy. I tell on myself upfront, very little to no exposure to economics theory. But fascinating nonetheless, despite my ignorance, I thank you all for the discussion. themes of individual psychology pop out to me, because I read with my filter, I guess.
1) Wealth. To what degree is wealth used for the benefit of all vs the benefit of few. (communism, versus socialism, vs monarchy, vs fascism, etc….)
2) Power. To what degree is power and control woven into economic theory. (How much, pain, punishment, cruelty is used and tolerated as influence of others vs other means of influence like education, persuasion, and teaching, showing, role modeling.)
3) Validation. What is the degree to which the economic theory represents the whole verses the part.
4) Contempt. What is the degree to which the idea that some of us are superior to others is woven into economic theory. (Friedman quote above…wow)
5) Awareness. What is the degree of collective awareness about these influences.
6) Autonomy. What is the degree that choice, versus helplessness affect change.
Random thoughts.
1) Gottman’s very substantial and empirical validated work on relationships shows that contempt is a destructive force in human relationship and human health. Gottman can predict with 93% accuracy which marriages will divorce based on the degree of 4 behaviors, contempt (defined as superiority and blame), tops the list as an extremely destructive behavior in humans. Add Susan Johnson’s collective work on the neurobiology of love and we learn that relationship is essential for our survival and that we are hard wired to pursue and maintain relationship and love. I was struck by the fact that contempt was expressed within these theories of economics so plainly!
2) Each if these economic philosophies has been created with varying degrees of awareness in a personal sense. The individual experience with each of the factors above will affect the degree of awareness about them. What we see in these theories is as much about what we as individuals have experienced as it is about the philosophy itself. Individual awareness about the influence of invalidation, power and control, and contempt, in our own personal experiences will effect the degree to which we are aware of these influences.
I love this blog!! My apologies if my comments are off base, cause I truly do not know much about it. Learning here. Thank you!!
I get what you’re saying, Peacerme. And I think your bringing in contempt (top item of Gottman’s four horsemen of divorce) could be crucial in understanding, e.g., some subset of ‘the Trump voter’ and why lots of the social media troll operations are so effective (all around/’left’ and ‘right’). So it would certainly relate to underlying economic issues felt by all.
I had noticed the left and right troll ops pushing “spite”- a special kind of spite where it hurts both the person and people who are “others” to them. (It’s like saying, “F me and mine, and F you and yours!) Of course this kind of spite is ultimately wholly destructive, and so would be why RU-et-al. spend so much time on it (pushing people to throw away their votes, pushing people to vote against their ‘interests,’ anti-vaxxing campaigns, etc.). I think contempt (self and others) fits well with this as the human ‘feeling’ of it all. And so that could be another important locus of change.
Reply button doesn’t work right now, for me at least.
But, I was reading the new guy. LOL, does this guy really think that printing money and deficit spending are implicitly related?
What do you mean implicitly? They are related as a matter of accounting.
Maybe one of us doesn’t understand your claims here. “Printing money” as in QE or other Open Market Operations or the fed funds rate?
Ah, I gather you are talking about monetary policy in specific instances, like at the ZLB.
The mechanism by which money is created is not strictly relevant here.
Did your earlier comment mean to say that there is often not a direct immediate relationship between pressing the print button and too much money chasing too few goods?
Not an economist. I so appreciate this discussion. I’ve read Kuhn’s work, korzybski, a little Marx philosophy. No economic theory. Some themes or dialectical polarities stuck out to me. Certain variables in the work and comments above seemed to repeat.
1) Wealth. The degree to which wealth is used for the benefit of all vs the few.
2) Power and control. The degree to which pain, suffering and punishment are used to influence others vs education, teaching, and role modeling.
3) Contempt. The degree to which contempt (the idea that some of us are more valuable than others) is woven into the economic model.
4) Validation. The degree to which the model represents the truth of the story. The whole vs the part.
5) Awareness. The degree to which we are collectively aware of these influences.
6) Autonomy. Freedom of action and choice to affect destiny vs helplessness and powerlessness.
I am sure I missed a lot here, but still this awareness is helpful for me. Of course I can’t help but read through this with out the filter of my narrow scope of work.
Random thoughts:
1) Gottmans solid work on the destructive nature of contempt on the individual human brain and body, as well as relationship, came to my mind. It’s not healthy for us and it destroys relationships. For example, Gottman has been able to predict divorce with 93% accuracy based on measuring 4 behaviors of which contempt tops the list. https://www.gottman.com/blog/the-four-horsemen-contempt/. It blew my mind to see contempt woven into economic theory. It strikes me that contempt is an important human behavior to be aware of. It’s the footings for racism, the eradication of whole cultures.
Clearly the degree of contempt of the individual theorist and perhaps even the theorists culture would influence the economics of the day. Add the work of Susan Johnson (founder of emotion focused marriage counseling) on the Neurobiology of love. Basically her collective meta analysis on the research on human love suggests that we are hard wired for relationship and love. We know as fact that love has healing power (at least it influences our perception of pain). https://www.mindbodygreen.com/0-13816/the-case-for-monogamy.html.
2) All of these factors are influenced by each other, systemically. So power and control affects levels and capacity to validate others. The degree of contempt influences the degree of power and control, and the capacity for validation. It would be interesting to see an economic model that addresses these factors. (To me anyway!)
3) Finally our awareness of these factors has as much to do with what we have been through individually as it does culturally or socially. Each economist has an individual relationship with the factors above and of course that relationship informs the theory.
Thank you. I love this blog. Hope my comments are not too off base as I am far from this field and have little knowledge about it!
I like Gottman’s work, although contempt is kind of a fuzzy concept… anyway, you’re gonna make bmaz go on a Gladwell rant.
Lol, I can only imagine such a sporting Gladwell rant.
Also, I had seen Peacerme’s comment above and just implicitly made up a definition of ‘contempt’ as the feeling that goes with spiteful action. I wasn’t meaning to, as in didn’t give it careful thought, but it might work. Or not. Though for these purposes I guess we need to find how to justifiably found uncontempt. Anti-contempt. Freedom from contempt.
Ugh. I didn’t mean to post it twice. I had a typo in my name the first time I hit submit and it disappeared. I thought I lost it. Re wrote it.
Gottman defines contempt as believing you are better than someone else. (Racism, sexism, ethnic cleansing, invalidation.)
While I’m trolling the libertarians, here’s a critique of MMT from the left, that I find fair. I’ll give it from Krugman, just for fun
https://krugman.blogs.nytimes.com/2011/03/25/deficits-and-the-printing-press-somewhat-wonkish/
I think most economists agree with this.
“Money creation in practice differs from some popular misconceptions — banks do not act simply as intermediaries, lending out deposits that savers place with them, and nor do they ‘multiply up’ central bank money to create new loans and deposits.”
Bank of England 2014 working paper https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy
It’s remarkable that in this post Krugman expounds the widely debunked story of how “base money” in banks’ Fed reserve accounts will generate inflation via the money multiplier. Why try to decipher his other views about money and deficits?
I’m not claiming to have figured anything out myself. I’m relying on the Bank of England (and other insiders) to explain money creation. Strange as it seems, Krugman is at odds with them.
That post is an example of what a squirrely discipline mainstream economics is.
That article was from 2011 and it certainly is not true that deficits never matter. It depends. Oddly though we have very little inflation just now and a sizable tax cut and very low unemployment. So there is that.
Yeah, the question is how and when does that change, and who pays for it? There are some benign answers to that, and some ugly ones. I worry that we aren’t taking the ugly ones seriously enough, and thus making them more likely.
The fed appears to be taking actions now to prevent inflation by raising interest rates. It could be premature and hence, will impact the market and the economy. Then again President Bone Spurs loves him a trade war and the market can’t figure that out either. As an aside the deficit does not appear to be too high at the moment. But then I am not qualified to make that call.
Krugman has made this assertion several times but never seems to see the responses from the MMT people. One from Bill Mitchell is here where he states unequivocally that DEFICITS ALWAYS MATTER. His summary is:
[an aside for new visitors to Emptywheel, the reply tag uses tinymce, the WordPress visual editor, and it seems to only allow a single server-side instance at one time. If the reply button doesn’t work, wait a bit and refresh the page. If a new comment has popped up, then reply will probably work again]
In Mitchell’s formulation, deficits are determined/constrained by the need to maintain price stability. But there is some confusion, I think, between MMT, strictly speaking, and some of the claims of many MMTers. WRT optimal short-term counter-cyclical policy, MMT claims that fiscal policy is better suited than monetary policy to maintain full employment/price stability over the business cycle. In the very abstract most models would say, it is about the same; in the real world it depends on a number of factors that are not fully known (like fiscal multipliers) and political economy/institutional detail factors like whether robust fiscal institutions can be designed to handle the load. That is, it could be right and it could be wrong.
The MMTer claims that Krugman is responding to is the idea that for governments that issue their own currency, deficits and debts are never an issue because they can never be insolvent. Thus, the size of government can be expanded without raising taxes. This is technically true (to a point, at least) but not really true: governments that do this don’t experience domestic debt crises, but they experience other types of crises: high inflation, currency crises, spontaneous “dollarization”, etc.
These are medium term issues that should be, strictly speaking, out of MMT’s scope as a theory guiding short-run policy.
Yeah, that’s a dumb response. Krugman’s point is “no one cares about how big the deficit is” which is very different from “we should always run deficits”
When I look at Neoliberalism as a European “importation” of an apparent Ideology for the assorted ‘smash and grab’ tangents, I am reminded that my view has been extracted or for being walled-off from today’s reality. I come at this subject matter from the standpoint of Yaqui or Apache, or more precisely, the Native American/Chicano/military vet, and subsequently, I look to see how neoliberalism survives within the next twenty years, or hence, my future and of the future of my fellow citizens here in the Sonoran Desert.
Take, for example, today’s “white” Democracy will begin to make its transition toward a “brown” Democracy, thusly, this transition will include a financially bankrupt ‘white’ Democracy that will become a “naturalized” neoliberal burden that will have to be addressed, effectively, otherwise an Authoritarian “glasnost” will be constructed. However, the reality of this burden of an intentional, yet effective bankruptcy will be knocking on the then, outsized door of Progressivism.
Consequently, Neoliberalism will be about yesterday’s “history” and not about how we will manage a “progressive” Democracy. And given that Chicanos are today’s largest cohort of progressives, “new” Ideas will become a premium of utmost significance. And where are these Ideas?
And my question to our good friend Ed Walker, will you find in your research on Neoliberalism, any newer and better ideas that can or will compete with politically prescriptive Chicano-ism or Progressivism?
For @Jonf (comments don’t seem to work reliably): The Fed is still tasked with price stability, and shows every sign of continuing in that role, despite pressure from POTUS.
It’s the trend in the the deficit that should concern us. At 5% of GDP at the peak of the business cycle it is pretty high by international experience, and it will only go higher when the recession comes. There is no forward-looking mechanism (a plan or even a political consensus) to reduce it.
We can continue to afford it, but typically it is this sort of pro-cyclical fiscal policy that sets countries up for nothing but bad choices down the road. The thing is, deficits really don’t matter until they matter, by which time they matter a lot.
Thank you Ed, Jay, JonF, Ken, and last, but seriously not least EOH, for your contributions!!! It’s confusing but ya’ll help to break it down a bit… for us plebes…somewhat
Has anyone read Volcker’s new book?
https://www.nytimes.com/2018/10/23/business/dealbook/paul-volcker-federal-reserve.html
He seems a bit fed up with this idea that we need inflation… I find that interesting.
The neoliberal ideology is especially tough since the (Koch astroturfed) Tea Party movement. It’s amazing how effective it was to just take their neoliberal propaganda and stick a patriotic bow on it, a lot of people bought it.
I think work like Ed’s is needed and I enjoy reading it. (Economics is mostly bunk and economists are worse than weathermen with their predictions.) But I really think some small steps could go a long way in this country, even without significant change.
The Heritage Foundation’s own Economic Freedom Index ranks the US lower than the Scandinavian and other countries with strong social programs. They say that’s because our economy is held back by regulation, but some of the higher-ranked countries have more regulation than we do.
The irony is that sometimes effective regulation leads to more freedom. Americans may have to change career paths based on health insurance, for example. And for many, going to school has become too cost-prohibitive. I’m speaking generally here, but that hybrid-type economy (not fully capitalist or socialist) is the best thing we know of right now.
As I read these comments my mind keeps going back to the concept of work. Im not sure how automation will play out but it seems likely that there will be a lot less work for people to do in the next 50-100 years and going forward. I think any forward looking ecomonic theory has to take this into account
I have a quarry that is economic in nature but still more of an aside…but i cant stop wondering about it. John Roberts halted the fines of an unknown foreign corporation whose identity is sealed. On a Sunday afternoon even though all four lower courts had dismissed the claims of immunity to American jurisdiction which this corporation had pleaded. The fifth floor of the courthouse where the request was filed was sealed as well. Former Justice Kennedy has a nephew who works at Dutche Bank. Kennedy was quite open about his willingness to step down so the Republicans could nominate another chip off the olden block. Is it possible that the Supreme Court would now be tainted by the Russian money launderers ?
You might want to post this on a more recent thread, one of Marcy’s posts. You may get a better response. Just be sure to mention you are reposting.
By Occam’s Razor, Kavanaugh has been a hard-hitting atavistic GOP shill for decades (including his role in Bush’s assault on democracy in Florida), so Russian money laundering would be low on his list of disqualifying factors, i.e. appeal to crazed conservatives.
Reply button not working, Jay had commented on the method of printing money not being relevant. I disagree. The distinction is very important. And, no, I don’t think the Feds movements are tied directly to the deficit. The fed isn’t in charge of how money is spent or taken in, and QE has little to do with federal deficits and more to do with the available money supply crippling the economy, a la Friedman. You can say “the gubmint does everything” but no one will take you seriously in any real policy fora.
Printing greenbacks and spreading them around or using them to pay of gov’t debt is very different from, say, QE. Friedman’s predictions of inflation aren’t coming true. While I find the discussion about actually printing greenbacks (or whatever) causing inflation to be boring, the discussion about QE causing inflation is not. Calling them the same thing denies the available evidence. Whether you believe the difference is due to the delay/psychological effects/or whatever is the interesting debate.