This will be a bit of a history lesson, but one that I hope I’ve made concise and that you’ll find the overview you’ll gain worth the effort of reading. If you want a clear, accurate lens through which to view what’s happening in our country today, we need an understanding of the recent economic history of the world – otherwise, it’s like trying to guess the size of something with nothing to gauge it against. A proper perspective and context will massively change how you see things.
‘Neoliberal’ is a word I don’t like using, for fear that a lot of people might not know what it means. But sometimes, it’s the easiest shorthand for a hateful worldview and set of values that dominates much economic thinking these days.
So much so that a prominent US neoliberal, Francis Fukuyama, with entirely typical but still staggering arrogance, wrote an essay and later a book titled ‘The End of History’ after the fall of the Soviet Union, basically claiming that the political and economic argument was now over, and the neoliberal, free-market system was the only worldview left standing and always would be. The mindset is less frankly stated these days, but still runs deep and wide, to the extent that many people can’t even imagine another way of seeing the world or another viable economic system.
This mindset, and this lack of imagination, is what has consigned us for years to a system that is based on the vagaries of ‘the markets’, which is about the same as trying to build a jenga tower on the back of a very nervous sheep.
What do neoliberals believe? Neoliberalism refers to an economic system devised primarily by a Chicago-based economist, Milton Friedman. Friedman – who unbelievably received a Nobel prize for economics for his theory – believed that the best way for the world to run is to have absolutely unfettered markets, free to do what they wish, with the minimum of regulation or government interference.
Moreover, he believed that state ownership of anything is bad, private ownership is always best, and that prices and wages should always be allowed to find their own level without government interference. Friedman posited that implementing these policies was best achieved in times of crisis, when the populace would be dazed and ready to believe policies that were clearly designed to rob them were actually for their good. The crisis could just happen, or it could be created – it didn’t matter as long as the neoliberals could take advantage of it There’s more to it, of course, but if you grasp that much about them, you’ve got the key points.
Friedman was reacting, in large part, to the ‘developmentalist’ economic and political system whereby countries controlled their resources and access to their markets in the best interests of their own citizens – the very opposite of globalism, in fact. Developmentalism, implemented by democratically-elected socialist leaders, was causing a steady increase in standard of living in the countries where it operated, with good wages the norm, fair distribution of wealth, decent taxes of corporations and the wealthy, and so on. Friedman hated it – and was able to align it with Cold War objectives and the US fear of Communism to win considerable funding and influence.
Because of Friedman’s worldview, which is embraced with a quasi-religious fervour as incontestible fact, neoliberals will hate the NHS, hate welfare, hate the minimum wage, hate any kind of social safety net and any kind of economic plan that is not based entirely on what’s most profitable, what’s best for ‘the markets’. In effect, these policies add up to a programme of planned misery for the majority of people, with the excuse that it’s ‘good for the economy’, even though such economic ‘recovery’ is of no benefit at all to the vast majority of a country’s inhabitants.
The ruling clique within the Tory party are devoted to a neoliberal worldview. Which in short means the UK is screwed – unless we resist.
Since its inception in the 1950s, numerous countries have been subjected to the neoliberal experiment. Yet in spite of the terrible results of these experiments, the media and politicians have managed the public perception of events so that few have understood. ‘Chicago School’ graduates have taken leading positions in the World Bank, the IMF and many national banks, so that countries with a differing view have faced a united wall of determined neoliberalism ready to strongarm them into toeing the small-state, low-spending, low-taxation line.
So much for the background. Since very few people will be aware of the facts, and of the Big Picture they create, unless you’ve read the outstanding book ‘The Shock Doctrine’ by Naomi Klein, I thought it would be useful to offer a very potted account of the results of neoliberalism – what have been the effects on the countries who operate according to its principles.
Neoliberalism has been foisted on nations via military coup, via fiscal blackmail by the IMF, the World Bank and ‘the markets’, and via a sleight-of-hand pseudo-democratic route (Margaret Thatcher being one such). It’s a versatile system in terms of how it takes power – and entirely ruthless and rigid in what it does when it gets there. So, let’s look at a very brief overview of the results in countries that have suffered it in the last 60 years or so:
– Democratically-elected President Salvador Allende deposed & murdered by Pinochet (bosom pal of Thatcher) in a military coup.
– Economic reform instituted through terror, with hundreds executed and tens of thousands imprisoned/exiled, to pave the way for the removal of price controls on food and other critical items, followed immediately by massive price rises.
– Slashed wages for all but a small ‘elite’.
– Rapid sell-off of key nationalised industries to private (and usually foreign-owned) corporations.
– Deregulation of finance and markets.
– Rapid enrichment of the ruling elite matched by rapid impoverishment of the middle and working classes.
– Suborning of the media to allow the illegitimate government to propagandise the population.
– Military coup
– Complete roll-back of Joao Goulart’s programmes to improve the lot of the poor
– Slashed social spending
– Complete opening of the country to foreign investment and control
– Massive inequality (still the 3rd worst in the world as of 2010!), with massive poverty and the creation of a small, vastly-rich clique
– Military coup
– Ban on strikes
– Employers allowed to fire employees at will (Beecroft, anyone?!)
– Price controls that made food affordable abolished
– Massive concentration of wealth in the hands of military leaders & the landed ‘elite’
– 40% wage reduction within first year
– Massive increase in unemployment & poverty, and rise in company profits
– Social security privatised
– Privatisation of utilities left huge parts of the population without water & electricity
– Elimination of food subsidies
– Removal of price controls
– 300% increase in oil & petrol prices
– Massive cuts to government spending
– Abolition of currency & border controls
– State companies downsized then sold
– Banning of strikes
– Massive police action against unions, with leaders imprisoned/exiled
– A shift of all social cost onto the poor
The first ‘developed’ economy to implement neoliberalism, when Thatcher – a Friedman devotee and ardent fan of Chile’s dictator Pinochet.
– War on unions
– Tax-cuts for the rich
– Massive cuts to social spending, including a denuding of the NHS
– Massive deregulation of banks & markets
– A sudden, drastic upswing in income inequality
– Massive sell-off of state utilities and social housing
– Thatcher’s kindred spirit Reagan takes power
– Massive tax-cuts for the rich
– Massive cuts in social spending
– Massive increase in income inequality (even sharper than in Thatcher’s UK, with zero real-terms increase for the lower paid in the following almost 3 decades)
– Entrenched impoverishment of large parts of populace
– Massive concentration of wealth in the hands of a small group of foreign-connected ‘oligarchs’ as state companies sold at knock-down prices
– Increase in people living below the poverty line from 2 million to 74 million in only 8 years with 25% of the population in ‘desperate’ poverty by 1996
– 3.5 million children homeless according to Unicef in 2006
– Massive increase in alcoholism, drug use and a doubling in suicides as people try to escape from the ‘economic miracle’
– Erasure of state structures to allow a ‘capitalist feeding frenzy’
I could also include Indonesia, Iraq, Uruguay and others, and point out that the very same policies are being forced on Greece, Spain, Portugal and Ireland using the same crisis-excuse, while the bankers and corporatists magically still get richer. But for the sake of brevity I won’t go into detail.
If you think some of the symptoms and effects above look familiar, you’re absolutely right. And in each of the examples mentioned above, a political or economic crisis – in many cases a deliberately engineered and talked-up one – was the excuse for the ‘reforms’ imposed to ‘save’ the economy.
The UK’s coalition government, true to its neoliberal values, is doing exactly the same. In spite of voting strongly in favour of Labour’s bail-out measures which are entirely the cause of the UK’s increased national debt, Cameron and co are using the ‘crisis’, blamed squarely on Labour in spite of the hypocrisy of it, as an excuse for the massive deconstruction of our social structures.
Claiming that it’s our social spending on public-sector wages, pensions, the NHS, welfare that is ‘unaffordable’ and has to be slashed to balance the budget, the Tories are carrying out a classic Friedmanite ‘shock therapy’, exploiting the perception of crisis and ignoring the real causes as an excuse for decimating the state and handing out fat tax-cuts to their backers, friends and sponsors.
Once you grasp the context, it’s as plain and unmistakeable as the nose on your face. If we grasp the lesson and the context of history, we can see the neoliberal crisis-tactic it for what it is. If we don’t, we’re doomed to become merely another example in a list that future societies might, or might not learn from.
The Tories in government would love us to be ignorant of the history of their philosophy, and to believe the lie that there’s no other viable economic system that we could possibly implement.
Let’s make sure we disappoint them – and learn from history, rather than repeating it!