Yves here. This post focuses on the role of neoliberal ideology in promoting a system of expropriating property and economic rights from ordinary people.
By Vamsi Vakulabharanam, faculty member with the School of Economics at the University of Hyderabad, India. Cross posted from TripleCrisis
The 2007-9 crisis in global capitalism brought a new energy and focus to the heterodox economists, and more broadly to the critics of neoliberalism from different arenas of society. It seemed clear at that time that neoliberalism had run its course when it met its structural contradiction – with the burst of the US housing bubble and the concomitant financial crises across the world, it looked like the avenues through which demand was being generated were closed and the system was poised for structural change. Three years later, Southern Europe is witnessing an intense so-called sovereign debt crisis with the working people bearing the brunt of it, and real economies in the developed world are continuing to witness slow growth. The US seems to be under the threat of the so-called fiscal cliff (which seems more like a political event rather than an economic one). The economies that grew quickly during the neo-liberal period, like China and India, have slowed down considerably. Across the globe, we seem to be going through a period of uncertainty without a clear path ahead. Yet, neoliberalism persists. Why?
There are multiple explanations for this. Bailout packages of various governments were directed at rescuing financial capital, and this has pitted the interests of financial capital against the interests of the majority. The global left has not been strong enough to take advantage of the crisis to better represent the interests of the majority. Governments across the world, after a brief gap, have returned to their neoliberal posture of supporting financial capital and so forth. There is truth in all these explanations.
However, we need to broaden the array of explanations both to take into account the spatial diversity of neoliberalism, as well as to deepen our analytical understanding of this persistence. I offer one such explanation from field explorations in India to add to the existing explanations. This addition is not simply academic, but it shows the need for deeper political engagement to bring about systemic change, given that our explanations of the structural contradictions of neoliberalism are on the mark.
In two recent field visits that we (a group of local researchers) undertook to understand the persistence of neoliberalism at the concrete level, we found some interesting phenomena. Both these visits were in the state of Andhra Pradesh in South India. The first visit was in the region of Telangana, which is highly politicized right now, as the people of the region are fighting for a separate state within the Indian nation-state. The second visit was to a tribal habitat in the northeastern region of the same state, where communist struggles have been active for a while. In both these areas, there are continued appropriations of common lands, common resources and minerals, such as Granite and Bauxite by local and foreign capitalist elites aided by the State. In the process, these elites are destroying the local livelihoods without creating credible alternative. Both these are classic cases of primitive accumulation or accumulation by dispossession, a process that has centrally defined neoliberalism over the last thirty-five years across the globe.
Accumulation by dispossession operates in our times through the following modes of appropriation. First, it operates through the acquisition of lands from small producers such as peasants, tribal people, artisans and the urban poor in the name of Special Economic Zones and the like. Some of the lands acquired thus, have became open to speculative enterprises of real estate dealers. Second, there has been a large-scale privatization drive in most countries that has made public sector enterprises alienate their properties at throwaway prices to private players. Third, and these are the cases that we have focused on – commons have been appropriated with ease either because the laws governing them are weak or because common properties are often meddled with by the State. What we found in these two regions is that the particular modes of appropriation that have come into being with great force during the neoliberal period have persisted even after the crisis.
Why is this the case? One explanation that ties in with the explanations above is that resistance has not been strong enough or effective from the people and their social movements or from the larger left movements. The other explanation that we offered is that neoliberalism has been able to create structures of populism that are deeply entrenched. The local elites have pursued a three-fold strategy for the continued appropriation of the commons. First, they (with the support of the State) have put in place various populist policy imperatives that have temporarily addressed the consumption needs of the majority without altering the deeper neoliberal structural forces that have inhibited employment growth and wage growth over the last thirty years.
For example, there are schemes such as housing or subsidized food for the poor even as their productive resources such as land are acquired by the elites/states. These have tended to perpetuate themselves after the global crisis, even with the loud demands for austerity. Second, the elites have continued to appropriate common and public resources to keep their own accumulation levels above an acceptable minimum in a time of slowdown of accumulation opportunities through regular economic growth. Resistance is sought to be controlled through populism of the kind discussed above. Even in regions that are highly politicized, such as Telangana, the leadership of the movement has been hand-in-glove with the local elites who gain consistently through the perpetuation of these appropriation practices.Third, professionals and middle classes have been the beneficiaries of a system that has thrived on the creation of enclave economies where there is a sharing of rents among the elites and these professional groups. These professional classes have taken up key positions in the government, media, corporate executive roles, and as intermediaries between the elites and the working people who use the commons. The broad support of these classes for the local elites has played a key role in the perpetuation of neoliberalism. As long as these processes persist, neoliberalism will be strong on the ground, with the elites and non-elites bound together in the larger neoliberal system through the different, yet entangled processes of appropriation, rent sharing and populism.
Of course, this cannot go on, since the logic of austerity is bound to create contradictions in the path of populism. However, this contradiction may unfold very differently across space and time, as not all governments are going to react identically to the demands of austerity. The 1% in the US (that the Occupy movement has targeted) or the top decile of the population (in countries like China and India) continue to benefit from the perpetuation of the neoliberal configuration while they are pitted against their large majorities. As long as the political groups on the ground do not make their voices heard loudly enough against the top 1% or the top 10%, and as long as there are continued benefits for the elites from the perpetuation of neoliberalism, the system will persist.
“… as long as there are continued benefits for the elites from the perpetuation of neoliberalism, the system will persist”.
Will it? How can one rule over 99 if these systematiclaly rebel and sabotage and take conscience and created their own power networks?
I’d rephrase it as “as long as the exploited are willing to walk sheepishly to the slaughterhouse… the system will persist”.
But of course most people is not willing to march sheepishly to their own deaths, are they? And if they are, they maybe “deserve” to be killed (if you aren’t even willing to fight for your own life, you’re clearly unfit from an evolutionary viewpoint and I’m not talking individuals here but social segments, classes) – a horrible thought nonetheless.
So I can’t but call once and again to open our eyes (class consciousness) and close our fists (class struggle). We will only get what we fight for. It has always been that way.
The real problem is the hope that many still have of partaking of the crumbs of the 1% (10%, whatever) without deserving it by either bootlicking minionship (if they accept your services) or forceful imposition, putting them in a position in which they cannot say “no” anymore.
If getting a job and therefore your survival depends on the 1%, how can you rebel, particularly in an increasingly authoritarian society? In the US, background checks are now routine in getting hired. If you participate in a protest, you risk both getting beaten up by police and getting an arrest/misdemeanor record. That would show up in a search and hurt job prospects in a difficult market. And that’s before we get to the growth of the surveillance state and paramilitary policing.
The British controlled the Raj with an even lower ratio of officials to the population. In ancient Rome, slave revolts were rare and crushed quickly even though slaves were 30% to 40% of the population, with the rebellion led by Spartacus the one, and still relatively short lived exception. Mark Ames has an excellent chapter on slave revolts in America in his book Going Postal, and he shows that they were extremely rare, and snuffed out quickly because most slaves joined in suppressing the uprising.
Europeans may be able to beat back the neoliberals because you have stronger unions and a history of successful collective action. That is just not part of the US psyche.
It’s very hard to imagine any kind of organised resistance in the UK. Apart from ubiquitous surveillance, repressive legislation and the pre-emptive use of police intelligence there are a number of cultural factors that make organised opposition almost impossible. Firstly, the power of marketing and public relations: people are atomised, focused on consumption and dedicated to individual pursuits. In addition, the society is now highly stratified. There’s no constituency for mass action, because there is no longer a system of mass production. Revolutions don’t happen in financialised economies.
Neoliberalism may be discredited and empirically falsified as theory, but the core of the project (passive consumption and spectator politics) is alive and well.
In other words folks in the UK aren’t hurting enough yet …
I think you’re right. The people who will be hurt are not “our” generation (to risk making a sweeping generalization about NC readers who I’d guess are 30+ or even 40+ on average). They’re the next generation who get to pick from the following delights:
* Student debt incurred based on rosy assumptions about post-graduate earning potential
* Continually declining real and even nominal wages
* Mis-priced assets and inefficient / distorted markets creating poor investment opportunities for those who do manage to get enough to save
* Despite ZIRP, a post-bubble Japan style of credit pricing which means that anyone other than a very narrow segment of the population being eligible for credit at reasonable cost. Basically, only the top 10~20% need apply otherwise it’s loanshark rates e.g. payday lenders.
* Despite “deflation”, an acute inflation in the costs of essentials such as healthcare, energy, food due to either officially tolerated fraud and looting by large monopoly or quasi monopoly enterprises or speculative bubbles again tolerated in commodity markets (or even both of these at the same time e.g. oil).
Eventually something will have to give in the next generation. But that’ll take maybe a decade. And of course, when it happens, it’ll be “where on Earth did that come from ???, whocouldanode ?”
Clive – methinks if this decline is “gradual” enough such that there has been time enough to “prepare” the suffering generation via reduced expectations, it may take considerably more deprivation than we have now, and even then ….
Example, folks have been “primed” for the loss of the social safety net to the extent that the youngers assume it “inevitably” won’t be there so the “best” course is to adapt to its loss instead of fight for its survival …
Methinks it doesn’t take long to do that – I’ve seen it in my lifetime …
Given that dynamic, ISTM that one useful function us oldsters have is to point out what IS, in fact, possible, what can be done because it has been and why it is in the best interests of the youngers to not “adapt” to this brave new world of carbonized catfood but fight for a better one ….
That is why I get pretty frustrated and frankly POd when i see all this “we’re doomed, we can’t make it better, TPTB are just too powerful, blah, blah, blah ….” Guaranteed recipe for failure …
Clive: in Europe at young, middle-aged and elderly are all being squeezed and robbed. People invest their savings in scams that get them penniless, their pensions are cut and being unemployed at 50, as many people is being dumped nowadays overnight, is in most cases just madness.
I’m in your 40+ profile and I see much suffering especially in my age segment.
“…..In other words folks in the UK aren’t hurting enough yet …”
Apply that maxim to the US and you have the problem neatly corraled…..The “common” folk are not hurting enough yet!
NOTHING in the building of the “middle class” in this country (and Europe) was acheived without “blood in (on) the streets”!
That is history…..
Granted that all you say is true – nonetheless folks could revolt at the polls without risking life, limb, employment or reputation and they won’t even do that …
The revolt of Spartacus the gladiator was a good slave revolt, no doubt. But there were other very successful revolts. Twice in fact the entire island of Sicily was taken over by slaves prior to Spartacus, necessitating major military response. Sicily was the bread basket of Rome.
“If getting a job and therefore your survival depends on the 1%, how can you rebel, particularly in an increasingly authoritarian society?”
It is a very good question because you bring the individualist angle that the system impose on us. Obviously in isolation we are doomed.
“The British controlled the Raj with an even lower ratio of officials to the population. In ancient Rome, slave revolts were rare and crushed quickly even though slaves were 30% to 40% of the population”…
In Marxist theory at least the modern Working Class is different, very especially a developed and highly connected Working Class as we are now (“the Social Worker” in Negri’s interpretation of Marx’ posthumous manuscripts with intriguing forecasts for our era). Capitalism is a shell in which the Working Class evolves, creating everything but under the parasitic surveillance of the bourgeoise elites.
The weak spot is that those bourgeois elites depend 100% and more on our work and that we really do not need them at all. Their power comes from our division, our power can only come from union and that union and coordination and that today is faster and more efficient than ever before.
Of course revolutions can fail but we also know that revolutions have succeeded and often in the recent past, getting more and more a class perspective – workers always man the revolutions, the question is if they can also lead them democratically – that is probably only realistic today in the era of Internet, when grassroots networking at any level is almost instantaneous accross the globe.
“Europeans may be able to beat back the neoliberals because you have stronger unions and a history of successful collective action. That is just not part of the US psyche”.
Europe has some advantages in the sense you say but the USA has others: a community of language and national identity across a similarly sized economy. As European, I hope that the revolution happens first in Europe and I do agree that some foundations are stronger here but I see in national narcissism a strong obstacle for continental class unity. In the USA that is not a problem.
But well, revolutions were never easy, but dying homeless in a dark alley (or equivalent: suicides, criminality, etc.) is these days a more and more common alternative.
Someone mentioned in another comment that this crisis is perceived as something temporary. That things will get straight again, hasn’t happened before already? But that’s only four years into the crisis, what will be the feeling in 2016, in 2020… as the situation only gets worse and worse?
IF there would be a recovery… but I’m almost certain that it won’t happen. There’s nothing more to squeeze and the whole planet faces a resources’ and environmental crisis that really blocks any new expansion other than the brutal “primitive accumulation”, what is another name for parasitic bloodsucking and leaving only carcasses.
So eventually People will open their eyes and something will happen. Exactly what… beats me.
I think you might be looking at our “community of national identity” though rose colored glasses from afar – Ironically this “national identity” consists in believing that we are all “individuals” and that is about the only thing we have “in common” …
This illustrates beautifully why the cult of individualism is insidious propaganda.
I distinctly remember Limbaugh speaking at length about “rugged individualism” in his diabtribes on the radio.
It all makes much more sense now given that divisions and disconnectedness are a threat to us as a whole.
America’s national identity is remarkably shallow. We were more cohesive when we had three broadcast networks transmitting very similar news and entertainment. I have friends who say they feel distant from their families by virtue of consuming different media.
I live in a completely different part of the country than where I grew up in an entirely different milieu. I DO NOT RELATE to them here. Except for small talk pleasantries I keep to myself. I’m pretty sure they don’t want to here what I have to say. I started to get into it politically the other day with someone I work with. I caught myself and shut up. I’m not afraid of people here. They aren’t mean, dangerous or threatening. I just have a strong sense that I’d be found to be quite obnoxious if I broadcast my views. As it is, I seem to be fairly well regarded.
I can’t agree: there are many more things that keep US-American together culturally than anything that keeps them apart. Huge labor mobility also helps: people often have relatives and friends all over the country… That’s comparable to the differences you can see within a much smaller country like Spain or France in Europe and not at all to the linguistic and identity barriers you have between, say, Greece and Finland.
For a common Finn, a Greek is not much closer than maybe a Bolivian or a Chinese. And that’s a true problem because the bourgeois media, as you know well, has played those national differences to get the various ethnic peoples against each other, making very difficult to create class identity and solidarity across the Union.
A clear example would be the plazas (Occupy, 15-M) movement in Spain and the USA: in both countries you can see many differences across regions and cities but in both cases the movements were nation-wide without question. And then the USA is almost 10x the population of Spain and has an economy even much larger.
So IMO in the USA a class struggle may be harder to coalesce but, when it does, it will necessarily be of major consequences.
People will not be motivated to engage in mass collective action until, as at the end of the Gilded Age, they think they have more to gain for themselves or their loved ones by engaging in it than they do by trying to make it in the system. The elites will squeeze and squeeze and squeeze until they find that point ,and then they will use considerably more overt violence to hold on to their gains in the delusion that fascism will finally settle the class warfare in their favor (where fascism requires occupation like resources and at the end of the day, no empire has really successfully sustained occupation against an indigenous resistance, as distinct from simpy wiping out the natives).
Ordinarily, it’d just be another cycle in the unfolding story, but the overlay here is the environmental crisis, which the present system is simply incapable of addressing, as it has long been incapable of addressing other systemic crises. Absent radical systemic change, and referencing the Chris Martenson post today, which I think just hints at the delusion that there will be a technological fix under which TPTB operate, life as we know it is toast.
It may be that an evolutionary change will occur which allows generations yet to come to survive, either undirected or at the hands of some particularly lucky bio-geneticist(s). There is apparently some growing evidence for the theory that humans made evolutionary leaps during cycles of rapid climate change, but ultimately on the question of possible extinction, we are making bets with leverage whole orders of magnitude worse than our over-leveraged financial system.
The Romans (the smart ones, anyway) always made sure their soldiers were paid. If soldiers are not paid you get mutinies.
Personally I’m unhappy with the terms ‘elite’ and ‘non-elite’. It pays far too much obeisance to a gang of thieves. I would prefer “the kleptocracy” and “their victims”.
Its hard to bite the hand that feeds you when its wrapped around your throat.
I think the public continues to be kept in the dark about the underlying structure of our socio-economic system. This results in the lack of a coherent and commonly held understanding of the implications of accumulating private ownership of property, ongoing inheritance and the worlds private financial systems and money supplies……and hence no political groups making their voices heard in any meaningful way.
IMO, too many people have FAITH that guides their efforts instead of REASON, which I consider an abdication of personal responsibility.
And the recent study released by Pew would have us believe that 80+% of the world is of the FAITH type…..I remain happily in the minority and continue spewing my textual white noise in hopes of challenging some of the 80+% to start thinking for themselves.
What is in your opinion REASON?
No political groups making their voices heard …
Hmm what do you want them to do – physically stand in front of folks, pull their fingers out of their ears and yell into them?
You can’t “make” your voice heard in a population that doesn’t want to hear it. I really am tired of this “groups gotta do more” – in a milieu where TPTB own all the media and have all the money, there is only so much that these “groups” can do. At some point in time the populace has to take SOME responsibility for seeking out and listening to alternatives. This idea that “if i can’t see you on TV while sitting on my ass on the couch with the remote, then you are not doing enough to engage me” is BS, IME …
How’s THAT for a little bit of “Reason”?
You flatter yourself. It’s all faith, as Wittgenstein observed “At the core of all well-founded belief lies belief that is unfounded.” Faith, you can’t escape it.
It’s really simple:
Because it has benefited the few over the many. That those benefits have netted them the most gold. That they own the gold. And hence, write the rules.
See. No big explanation needed.
I would submit that the main problem right now is one of a perception of time. I’ve been to China and India since the crisis began and,like here, there is still a perception that this on going crisis is a temporary one. While there may be questioning of some of the underlying issues that caused it, there is a reticence to believe that the problem is fundamental to Neoliberalism. The true end of Neoliberalism will begin once a threshhold event takes place. That true revolt will begin once the next, bigger crisis hits because then it will be clear in the peoples’ minds that this isn’t some hiccup but something tragically wrong with Neoliberalism’s design. I do in fact believe that event takes place in 2013.
This sounds correct. I’d add that the fundamental driving force is thermodynamics. As net low entropy energy decline continues neoliberalism will cannibalize more and more of the 99% until the threshold of mass resistance/rebellion/delegitimization is reached.
Neoliberalism always looked like a bag of $hit sandwiches to me, I always wondered why anybody who wasn’t really rich would promote it.
But if people still have to be convinced after watching the very same banksters that cauased the crisis get massive bailouts with no penalties, then I don’t know what would convince them.
One of the things that doesn’t get mentioned by us progressives and those generally on the left of the political spectrum is that labor (I use the word “labor” in a very broad context because these actions happened 30 years ago and it wasn’t *individuals* at fault) overplayed our hand and were the extractive ones in the 1970s.
We’re paying for it now in spades, of course.
Call it Karma if you like, there’s many other more scientific explanations, pick one that suits you, but non neoliberals have our work cut out to correct the perception that somehow we’ve brought all this on ourselves.
A classic case of a necessary correction going into an extreme overcorrection.
Not sure who you’re talking about. The adults I knew during the 70s where a mix of lower-level civil servants (scientists, teachers), a few engineers and salesmen, with the occasional doctor/lawyer at the high end. All were apparently prosperous without working the kind of hours people do now but none had lives of idle luxury. The older ones had in fact lived through depression and war. In what sense did they “overplay their hand” or become “extractive”?
I was teacher in the 70’s. Made in the $20s. Same as everyone else I knew.
I hope I don’t have return any of those extractive gains.
I’m guessing Clive may have been referring to “big labor” such as the Steelworkers, Teamsters, and the UAW overplaying their hand(s) 30-40 years ago. Now the steel industry is gone, the auto industry almost tanked and had to be bailed out by the fed and the UAW made huge concessions, and the Teamsters? I never hear about them anymore.
What did labor “over-extract” in the 1970’s? And who did labor “over-extract” it from?
I read an interesting explanation of who/what first brought neoliberalism to power within the Democratic Party.
And I read it on Digby, of all places. She was retransmitting something Perlstein ( a politicultural pop-historian of the Nixon era) had to say.
According to the DigStein theory, which really helped me see things I had suspected for a while, many “young” and “very young” Democrat-identified activists did all kinds of campaign and other work in the McGovern Campaign. The young Clintons for example worked for McGovern in Arkansas (I think). These young Democrats beheld all the big powerful traditional-Democratic unions turn against McGovern and overtly support Richard Nixon in the 1972 election. These young Democratic activists felt very betrayed. They designed their Ideology of Revenge, which was NeoLiberalism, and they bided their time, and they wormed their way into the Democratic Party. When they had seized control of it, they applied the NeoLiberal Agenda Policies to get revenge against Labor at every level, by using Free Trade Agreements to destroy industry throughout America in order to destroy the industrial unions, etc. etc.
In briefest crudest form, NAFTA/WTO/MFN for China/ repeal Glass Steagall/etc. were the DLC’s revenge for Nixon’s Hardhats. In other words, NeoLiberal Third Way DLC scum filth eagerly built upon Reagan’s introductory anti-union work to make sure that unions ( and the New Deal) would NEver Ever recover.
I think that’s a little overstated, but I do think that cultural liberals systematically made their own ideological war on the white working class, who they took as a legitimate target due to their reputed incorrect politics and ethical laxes in the pursuit of their own self interest. In a word, the white working class is racist, by definition, and therefore worthy of no defense.
In recent decades this sense of white working class moral culpability has met up with the neoliberal economic agenda as promoted by the business class and the political right, leaving the working class (race indifferent) politically defenseless.
But I don’t necessarily think that neoliberalism was systematically promoted by essentially the D-Party as a form of revenge against the white working class in the first instance. I think it’s more a case of where liberal elites have more recently discovered their own interests, combining with a distinct lack of sympathy for those on the losing end of neoliberal policies.
I’m actually a little surprised to hear Perlstein advanced this revenge thesis, given that I see him as very much participant in this portrayal of the white working class as one big undifferentiated block of “Nixonland-ian” racists.
But, maybe he did. I guess you can always see the white working class as an undifferentiated block of Nixonlandian racists and also elaborate a revenge thesis that a neoliberal economic war was systematically perped against them by the liberal side of the culture war that you yourself are on.
All of which just goes to say that when people reflexively defend the idea that we’re all “individuals,” who only knows what’s going on inside their heads while their lips are moving.
It’s not like they haven’t had a lot of stuff projected onto them by others, to which they could make no real response.
If culture-war liberals make laborers poor enough, the culture-war liberals may well follow the laborers into poverty. Will the liberals consider their interests to have been well served in that eventual outcome?
Perhaps I project my own thoughts onto the DigStein explanation. If so, then I have to take full credit and/or blame for deciding to believe that the DLC Clintonite program was a long-plotted feast of revenge against the unionized industrial working class. Because that is what I believe in major part. Clinton decided to destroy the economic prospects and survival of the people who did not vote for his beloved McGovern so long before. His method was to destroy the industries which supported industrial unions. His weapons against these industries were the Free Trade Agreements. Not just Clinton, of course. The entire DLC, which the bussiness owner class supported for its own “honest greed” reasons.
Now . . . am I on the DLC Clintonite side of the liberal culture war? That is what I understand your last sentence to be saying there. You are free to think so. If you are correct, then your theory of me is correct and you will accurately predict what I will think about various things going forward. If you are incorrect, then your theory of me is also incorrect and you will mis-predict what I think going forward.
Why does neoliberalism persist?
Neoliberalism defines our culture, particularly in the US and the UK. Turning away from neoliberalism means changing our cultures. Most people don’t reflect on their culture and you can’t change what you don’t see or understand.
I think you are right. It is like the air we breathe.
Is here any evidence that, as a species, humans are any smarter than lemmings? I don’t see any cause to believe that we won’t expand our exploitation of our ecosystem heritage until we exhaust its capacity to support us and our population crashes just like any other species which finds itself without sufficient predators to keep its population in check.
You are probably correct – but methinks we still have to try …
Many human groups did just what you hope for. The Indian Nations of this hemisphere, for example, were steadily upgrading their ecosystem heritage till the time of Columbian Intrusion.
“Modern Civilization” and humans are not the same thing.
Neoliberalism defines our Culture???
I would say it defines our common Vulture…
Vakulabharanam gives us a rather limited view, that of regional or national economies that are resource rich and thus become overly reliant on the production of primary materials. In the modern age, Spain was the first exemplar of this sort of economy. Spain’s economic engine was gold and silver extraction in the New World using what was for all intents and purposes slave labor, both Indian and imported African slaves. Spain’s vast mineral wealth ended up being a curse because metropolitan Spain did not follow the rest of Europe in developing an industrial and manufacturing economy with a large, well-paid workforce. It relied instead on imports for manufactured goods. In my way of thinking, therefore, what Vakulabharanam portrays is more of a microcosm, because the greater macrocosm of industrial capitalistim requires aggegate demand, something that mineral extraction alone fails to deliver.
There’s been a lot said and written as to why resource rich economies fail to develop a strong manufacturing and industrial base with a large, well-paid workforce, and why the great propensity exists in nations or regions with vast mineral wealth to become banana republics. These range from being the victim of imperialism (or neo-imperialism, which is what neoliberalism is) to the Dutch disease.
Here’s an ineresting discussion where Norway is compared to Africa, a region where the resources sector amounts to 25% of the GDP yet only employs 1% of the workforce and has resulted in nothing but increased poverty for the masses:
As always it is a bit complicated because Spain did not exist legally before the early 1700s and the process you mention was made by Castile in fact (Aragon and the other European members of the crown, like Flanders, were forbidden to take part in the exploitation of the New World… directly). Castile had also a primary sector economy in Europe, exporting mostly wool, while the Crown of Aragon looked to the Mediterranean and exported cloth and other manufactures. This industrial tendency was even stronger in another component of the Spanish crown, which was Flanders (which was of course the center of the European economy in that time).
However the authoritarian control of the Catholic dynasty affected all realms similarly and it was then that Flanders was gradually replaced by the more innovative Protestant states: the Netherlands and England.
The problem of Castile/Spain was not so much mere extraction but that such extraction, as well as whatever taxes were collected in industrial and mercantile towns like Milan, Barcelona or Antwerp, was dedicated, not to the healing and improving of the national economy but to pointless and endless military campaigns all around. Basically the Andean and Mexican silver ended up in the battlefields of Germany, Italy and other places, serving no practical purpose.
Notice that the USA is doing exactly the same today and that may be interpreted by future historians as part of the reasons behind the ongoing crisis: wasting of resources in Afghanistan, Iraq and in general an oversized imperialist military machine instead of using them for the public benefit.
It was the 80 Year War with the Dutch that more than any other factor ruined Spain financially. It wasn’t only the direct costs of the war, which were enormous. There was also the indirect cost of Dutch attacks on Spanish interests outside of Europe. Case in point was the Spanish attempt in the 1590s to stop Portugal’s re-export of spices imported from Asia to the Netherlands. The re-export business had always been a major element of commercial prosperity in the southern Netherlands provinces, so they were hurt. The rebel northern provinces were, naturally, not hurt. They simply got into the Asian spice trade themselves via the Dutch East Indies Company(1602). Not only that, Portugal’s breakaway from Spain some 40 years later was largely prompted by Spain’s failure to protect Portuguese overseas interests.
The point is that national policies informed by extractive, rent-seeking economics wind up failing even on their own terms.
Well, the greatest damage to the Spanish Empire by the Dutch was done to Portugal (then part of the Spanish Habsburg Crown) but Charles V, Philip II and successors were involved in many other wars: the devastating 30 years war in Germany (often against Scandinavian powers), wars in Italy, a number of wars against the Ottomans, intermittent wars against France or inside France (wars of religion), wars against England (the Armada), invasion of Navarre, etc. “Blaming” the Dutch alone does not seem correct to me, although they were a factor too. The reason was unmeasured imperialism, megalomania, the irrational dream of an Empire.
“Not only that, Portugal’s breakaway from Spain some 40 years later was largely prompted by Spain’s failure to protect Portuguese overseas interests”.
Of course. And that was yet another costly war (which was fought in Portugal and Catalonia – the latter failed to get their independence though).
The English were particularly ingenious in this period because their economy was originally also based in wool exports to Flanders, just like Castile’s, but they did not got stuck in that stage and began setting the foundations of the industrial revolution. That was totally over the head of the Habsburg Catholic Neo-Roman mentality.
Britain never wanted to be “Rome” but the USA does and is following, mutatis mutandi, the same catastrophic steps than Castile-Spain under the Habsburgs.
The frequent references to Spain in Holland in this discussion are noteworthy, because Larry Taub in his book The Spiritual Imperative explains how the Dutch replaced the Spanish according to the Indian theory of history, i.e. the Caste cycle. Spain was the last “Warrior Caste” power, Holland the first “Merchant Caste” power. In Taub’s macrohistorical model, the US is the last Merchant Caste power and will be replaced by the next “Caste” in the cycle: The Worker Caste, which is centered in East Asia (Confucio in Taub’s macrohistorical model). If you study Taub’s Caste Model, the end of Mercantile capitalism is eminently predictable, understandable and desirable.
We educated and professional classes help to perpetuate the system. While we know we’ll never be part of the top 1%, we tend to believe that hard work will get us into the top 90% or the top 80% or the top 70%. We rationalize the system over chaos in so many ways. I think we’re all more or less crooked in our thinking.
There’s also been a tendency in recent decades among educated & professional people to accept the notion that they’ll benefit in the long run from lower taxes, less regulation, and cuts in public services. What’s tacitly accepted here is that they won’t need those public services because they’ll be able to buy whatever services they require. As for those whose income from investments is either non-existent or inadequate (the infamous “47-percent”)the answer is: tough shit. If you’re looking for one reason behind the feeble response of the middle-class Left to the financial meltdown and its sequel, this is a likely candidate. George Orwell noted the same problem in Britain between the two world wars: educated, critically-minded people who were–whether they liked it or–rentiers.
There’s also been a tendency in recent decades among educated & professional people to accept the notion that they’ll benefit in the long run from lower taxes, less regulation, and cuts in public services. What’s tacitly accepted here is that they won’t need those public services because they’ll be able to buy whatever services they require. As for those whose income from investments is either non-existent or inadequate (the infamous “47-percent”)the answer is: tough shit. If you’re looking for one reason behind the feeble response of the middle-class Left to the financial meltdown and its sequel, this is a likely candidate. George Orwell noted the same problem in Britain between the two world wars: educated, critically-minded people who were–whether they liked it or not–rentiers.
SS – you have a magic finger – how did you get your comment printed twice when some folks can’t get on once?
I just tried posting “yup” here just as i did above and the machine wouldn’t let me …
i wonder if the machine world is laughing at all us jolly little posters – maybe our problem is we have to start making some “lefty” computers …
When one is a virtuous pagan all things are possible.
LOL! i love it! So is that the answer to the perennial “What’s up, doc?”
(To Aquifer, actually. . . .)
Aquifer! Read the two seemingly duplicate Sufferin’ Succotash posts very carefully. Note that the very last line in the two posts are different from eachother by one word. That word is “not”. I will cutpaste the two seemingly duplicate copies of the last line.
“minded people who were–whether they liked it or–rentiers.”
and now from the second of the seemingly duplicate comments.
“minded people who were–whether they liked it or not–rentiers.”
There. See the now-you-see-it-now-you-don’t word “not” ?
Neoliberalism isn’t about being right, it’s about getting paid. We’re not talking about a coherent, evidence anchored ideological or analytical program, we’re discussing a marketing pastiche of power points designed to make Third World rubes open their borders and wallets to be ‘guided,’ i.e. fleeced, by degreed and influential Rich Whites on the make (and their running dogs).
Yves, that’s an excellent statement about the ‘why’ people are not more actively engaged against the status-quo. The risks are secret lists that can prevent you from -well, anything, now and into the future: flying, jobs, clients, medical treatment etc. -its all secret.
But that explanation doesn’t go to the heart of the matter, which is the suppression of news and the ubuquitousness of propaganda and its twin, suppression of real information. As Wall Street criminal behavior sucked up one M&A deal after another, the free press and all media outlets including entertainment and Hollywood became corporatized; automatically sucked into the vast US propaganda machine; the most powerful tool in the hands of an already over leveraged marketing machine of the multicorporations and their government clients all over the world.
A free press, a powerful press would have served as a preventative, as they exposed intentions among the power elite in the ‘popular’ media.
The way things are now organized; corporatist bankster propaganda has a huge billions of dollars megaphone; while those truth tellers working in the public interest with alternative views willing to investigate and report on government corporatist conspiracies are starved (as in ‘starve the beast’), and shouted down -literally.
Well we still have copy machines and shoe leather, don’t we?
a little accompanymentfor the walking here
Hmm, I think i had something more like this in mind …
These Boots are Made for Walkin’
I listened to the lyrics again and they seem to fit in an almost LOL manner …
Course in the winter we’ll have to wear more clothes …
starved and vilified
The process of “Accumulation by Dispossession” is also useful in understanding the dispossession of people in eastern Europe following the collapse of communism. The neoliberal invasion of eastern Europe and Russia stripped public property and public lands and virtually handed them to capitalists with little or no transfer cost.
Well it seems to me this is part of the problem – describing his scenario as “accumulation by dispossession” instead of just plain ole’ “theft” …
I find it by turns exasperating and amusing to see how much effort, apparently in the name of seeking “respect” for their opinions in more rarified circles, folks make to use big words or fancy phrases for very simple ideas …
It’s fun – I’ve been known to attempt it myself, but if he is trying to make a real point – obfuscation via accumulation of multi-syllabic descriptors is not terribly utilitarian, IME ….
But it seems to me that “Accumulation by Dispossession” also describes the dispossession of people in eastern Europe during the rise of Communism. I have trouble thinking of neoliberalism as anything other than a Sprachspiel or a gloss over the basic process.
Have you ever taken a look at Colin Crouch’s book “The Strange Non-Death of Neoliberalism”?
Yves, what if the financial crisis was the defining event for real neo-liberalism and not just its previous shadow? The new Empire is just beginning and has yet to establish itself fully. Debt will be the lethal weapon used to establish the new regime and will be as lethal as a nuclear bomb, destroying the public good and replacing it with private debt.
This debt weapon is just beginning its trajectory and when it has achieved its target, the elite will be in full control of the wealth and the means to acquire more wealth. Everyone else will owe debt to those in power. The majority will have access to voting but without democratic principles because those who are elected into power are the same elites that brought us the crisis. The more money a politician has, the more likely he is to gain power. We are only halfway there to the new financial reality.
Jack London had it nailed more than a century ago…
Warning: the following is not about doggies.
“… those who are elected into power are the same elites that brought us the crisis.”
Well whose fault is that, pray tell?
As for debt – as Hudson would say, debts that can’t be repaid won’t be. So as soon as enough of us say “I can’t repay this debt, so i won’t” the system will have to “default”, but it will obviously be “de fault” of those who designed it …
More than 90,000,000 (yes, you’re reading it right…ninety million) registered voters did not excercise their right to vote in the last presidential election………
It only takes a “majority” of the voting public to elect our legislators in Washington (including the presidency)…..
So, if only approx. 50% of the registered voters, vote…..
And, it only takes 51% of that group to elect our officials…..
Then, ergo, we have, “tyranny of the minority”……a situation that we preached for decades would bring down the Soviet Union…..
i have to ask, because both here and upthread Aquifer made the same points about the non-voters—what in heck are we poor dupes supposed to accomplish by voting?
i am a non-voter. my position is that a choice between puppet A and puppet B, both of whom are beholden to various moneyed interests is not any real choice at all. add that most legislation and policies are so complex and manipulated by these same interests (as well as the frame put forth in the media, a la the “fiscal cliff” nonsense) that unless one is willing to devote all of their time to following these miscreants around, it is like tossing a coin into a fountain and making a wish that all will turn out “ok” and that the mayor won’t be swayed by local property developers or the fluoride/casino lobbyists at the next posh dinner function on his schedule.
the system itself appears to need abolishing. if they don’t get their dirty hands on something the first time around, they’ll merely add it as a rider to some obscure bill right before the session ends for the big ski vacation next time. the octopus has too many tentacles for the ‘average joe/jane’ to keep up with. especially when the nearest representative of that system (employers, landlords) has tyranny over one’s daily subsistence and just coping with the amount of rules and hoops on that end is exhausting (try taking a look at ANY low-level employee handbook nowadays. they are ALL 5″ binder-sized).
with Yves mentioning background checks and almost all places (including employers now) wanting credit checks, and one mistake likely to label you an unemployable, unrentable risk, there’s just too much to cope with in a day. would that i had 20 more lives, and an equal proportion of eyeballs, to read up on all of the things that i’m supposed to be aware of and take action on as a responsible citizen. it takes most of my resources just remaining human, sorry.
You are correct – choosing A or B is hardly worth the effort, so why not try C? Not voting just perpetuates the rule of the duopoly – TPTB are equally satisfied if you vote Dem/Rep or not at all – but would be quite unhappy indeed if a significant number chose outside those parameters, so why not give ’em the finger – on the lever of the machine the next time you get a chance … If enough folks did it, voting would actually matter!
Just because debts won’t be repaid in money doesn’t mean they won’t be repaid. They may be repaid by sale into neo-slavery, or theft of everything you own, or privatisation of every public asset or etc.
Supose the Neobamacrats want to sell all the National Forests to private buyers. If millions of Armed Americans go camping out in all the National Forests, the private buyers might find it hard to take possession even after having bought them from their friendly Neobamacratic government. Whereas if millions of Armed Americans are all disarmed, they won’t be able to camp out in their millions with their guns and ammo in the National Forests, and the private buyers will find it much easier to take possession after the privatization sale. Might that be part of why the Establishment is going to try for Gun Control all over again?
If you’re not pale you’re not alive, just saying….. http://www.youtube.com/watch?v=oOmfMtHY7_Uhttp://www.youtube.com/watch?v=oOmfMtHY7_U
One key aspect of the discussion here is the relationship between state and economy. As a contribution to this, I provide the following links which may be of interest to NC readers.
“Crash! A brief history of modern global capitalism – audio slideshow
Marxist theorist Leo Panitch argues that the role of nation state in the development of global capitalism has been overlooked. He picks out key moments, outlined in his new book The Making of Global Capitalism: The Political Economy of American Empire that demonstrate the intimate relationship between modern capitalism and the American state.”
“On October 31st Sam Gindin and Leo Panitch, authors of The Making of Global Capitalism: The Political Economy of American Empire, spoke at Town Hall Seattle with economics Professor Dan Jacoby. Their conversation, broadcast on C-SPAN’s BookTV, challenges the dominant economic theology that assumes globalization to be the natural progression of western capitalism. The authors, whose work Jacobi calls “magisterial,” discuss in detail the formation of this ideology after World War II. Probing both the union’s emphasis on individual consumption and the anti-globalization movement’s tendency towards stasis, Gindin and Panitch call for more effective tactics in the quest for economic reform.”
The escape valve for past plunder of the masses by the few was the ability of the masses to move to unpopulated areas or take-over other land. We have no place to go. When our space is polluted enough that we can not produce food, we need to fight. Time to move to the forest and rob the rich to give to the commons. Gandhi would be shot today either for being a vagrant or by someone planning to “stand their ground”.
I glsdly go to my “reward” knowing that the Butterlies will inherit this beautiful planet….
We humans don’t deserve it…..
Ripose in Pace!
Neoliberalism is the dominant political economic propaganda giving cover to looting and the looters. Like any good propaganda, once entrenched, it can survive a thousand debunkings. Neoliberalism like the kleptocracy it serves can not be reformed. It can only be overthrown. But for that overthrow to occur, there has to be an alternative. This is where the current kleptocracy has proven itself so clever and insidious. It has bought, co-opted, or created all the usual sources of alternatives or even any potential nexus of opposition: the politicians, the parties, the judiciary, the media, the regulators, academia, the Tea Party on the right, and the faux progressives on the left.
The first step is to understand the nature of the problem. The second is to see the traditional avenues for opposition are closed off. The third is to break with these, and start creating alternatives. And all through this, educate, educate, educate, and organize, organize, organize.
It has not bought or co-opted all …
That’s what I first thought: it’s “the dominant political economic propaganda….”
When Economic Hit Men do their dirty work (by faking data on massive infrastructure projects, for example, with the sole goal of inducing irredeemable debts that will then allow their masters to assert ill-gotten dominance), they’re not thinking, “Oh, but to do so would be bad economics.” They and their masters don’t give a flying fuck for “good economics,” they’re out to assert full-spectrum dominance.
I’m always on the lookout for discussions of political economics that take into consideration the following. Aside from Michael Hudson, who sounds like he’s talking with Economic Hit Men in mind without ever mentioning them explicitly, I almost never find it.
So, where exactly do those kinds of operations fit in theories of economics? I have a hunch that they don’t. I have a hunch that the theorizing related to neoliberalism is weapons-grade bullshit.
The people who give EHM their marching orders, I suspect, don’t give a flying fuck about economic theories. For them, the name of the game is full-spectrum dominance.
Nice comment. Yes, I think the people who implemented full-spectrum dominance idea in June 2000 were the one per cent of the one per cent. This basis point of the US (less than 31,200 people = 1 ‱ of 312 million) did all the planning and execution of the 9/11 scam, including the incessant propaganda of fear after 9/11. It isn’t “Accumulation by dispossession”, or threft, it’s mass murder and robbery, putting people in fear and get their posession through the banking system. What does it means that the war on terror was made by credit ? It means the masses, murdered, terrorized, disoriented, will pay.
Thanks, Minh, glad you liked it.
I’m forever haunted by that phrase, “resources our corporations covet.” What resources don’t they covet? What’s to stop them from applying those same wildly successful techniques right here at home? Can you say “fraudclosure”? Or perhaps “fiscal cliff”?
My wildest idea is that, just like it took a conscious decision to weaponize psychology into PSYOP (see The American Psychological Association and Torture: The Day the Tide Turned), just so, a conscious decision was taken to weaponize comparative mythology into MYTHOP.
In this, my all-time favorite Naomi Klein speech I’ve been haunted by a most innocuous phrase: “cooked up.” She says, a plan was “cooked up” to let loose on Chile the monstrous theories of Milton Friedman.
Naomi Klein: Wall St. Crisis Should Be for Neoliberalism What Fall of Berlin Wall Was for Communism
Exactly what’s involved in cooking up “a project of deliberate ideological transfer”? You’re going to need a cover story, right?
It’s my belief that the contemporaneous work of Joseph Campbell, on the power of myth, did not escape the attention of the people behind this project. What’s the power of myth? Nothing much, just to bring into being the world stage on which we’re all playing our notorious parts.
If you were tasked with writing the cover story for a plan to jack a whole nation, all at once, how would you do it? You’d resort to the tried & true motifs of mythology, that’s how. You’d use the power of their own dreams, fears, terrors, and aspirations against them.
The problem with that approach is familiar to any fan of sci-fi. As with the flashy-thing in Men In Black, you can only fuck with people’s sense of reality itself for so long, then the spell wears off. And once detected, deception of this sort is the mother of all blowback.
That right there, the hope that the spell is wearing off for enough people soon enough, is all that keeps me going some days.
The truth support by physics, mathematical calculation is too hard for those politicians to handle. They’re in denial. The so-called intellectuals of the USA and western Europe also in denial. We need a model of the event displayed in every crossroad of every city in the World to wake them up.
Take the specification of the building(500,000 ton total, 100,000 ton of construction steel) and the Boeing 767 (90 ton when empty, with 31 ton of fuel at impact) and make a model 1:225 of the 9/11 event. (the original measures : WTC1 208x208x1368, WTC2 208x208x1362, WTC7 330x140x610 feet, Boeing length 159 ft).
Can an AK-47 projectile weights 8 gram and 1/5 of a tablespoon (2.75 gram) of gasoline destroy to dust an object of the height of a man (6 inch) with a square base of 11 inch x 11 inch, weight 97 pounds, with 19 pounds of steel core ?
The speed of the plane is 1/2 to 1/3 of the speed of the bullet when it leaves the gun. And 8 gram is half the weight of a typical aluminium beer-can.
The AK-47 projectile 7.62 x 39 mm is made with lead covered with copper, while in our model the Boeing is made of aluminium and empty inside, 8.5 inches (wingspan and length) the kinetic energies of them are the same if they fly at the same speed. The muzzle velocity of the bullet is 715 m/s (2,350 ft/s) and the plane speed is 470 to 590 mph upon impact which is 210 to 264 m/s (690 to 865 ft/s).
One third of speed at impact leads to one ninth of kinetic energy. Now, how do you explain the destruction of the towers 1 and 2, let alone WTC7.
But then they all looked away. The so-called intellectuals.
Sorry, the height of a tall man is 6 feet or 184 cm (1368 : 225 x 30.48)
I agree. I don’t think it has anything to do with “neoclassical economics” any more than I think the so-called “heterodox” or MMT economists in any way address what is promoting global austerity or the US fiscal cliff, which is all about privatizing public goods and the delivery of public services.
ie., “economic hit men” exactly. Every time the so-called heterodox economists focus on the pedantry of the former as opposed to the machiavellian realpolitick of the latter, I just rolls my eyes.
Yes, it’s true that Michael Hudson is the only one who seems to assume the economic hit man as the basic model of neoliberalism. That’s why he’s my favorite. I used to like Bill Black, but lately he seems to have been enlisted in the into local UMKC pedantic priesthood–which is a serious waste!
the military does come into it though — because in the end it’s the military that prevents countries from easily repudiating their onerous debt.
either through direct invasion, overthrow of leaders through covert means, or general destabilitzation funded through the military-industrial complex.
“But for that overthrow to occur, there has to be an alternative. ” – yes, this to me is fundamentally the reason neoliberalism persists. “Philosophy abhors a vacuum” as someone once said. Humans by their nature need to believe in something positive. It’s very difficult to live on negatives. As long as the lessons from the past are not lost we will get there (something better I mean; utopias require infinite knowledge which none of us will ever possess).
If the neolibs and the kleptons and the plutons are too strong to overthrow for now, is there a way to undermine them in the meantime? Are there many little ways to attrit or degrade or dry up some, or many, or other . . . of their revenue streams and power streams? Is that what people like Catherine Austin Fitts and Sharon Astyk and Ran Prieur and Woody Tasch and the Contrary Goddess (blogger) and hundreds and hundreds of other people and groups are working on making possible?
The tools of massively distributed massively leaderless mass economic rebellion and attrition and underminement and sabotooge?
Just a few of the links on examples of the dynamic discussed: