Contemporary Capitalism: Neoliberal Capitalism, Financialized Capitalism, or Globalized Capitalism?

By David Kotz, a professor of economics at the University of Massachusetts-Amherst and the author of The Rise and Fall of Neoliberal Capitalism (Harvard University Press, 2015). This is the second installment of a two-part series based on his book; see the first post here. Originally published at Triple Crisis.

While it is widely agreed that capitalist economies underwent significant change after around 1980, there are different interpretations of the new form of capitalism that emerged. There is no agreement about the best organizing concept for post-1980 capitalism. Some view it as financialized capitalism, some as globalized capitalism, and some as neoliberal capitalism. These different conceptions of contemporary capitalism have implications for our understanding of the problems it has produced, including the financial and economic crisis that emerged from it in 2008. Focusing on the U.S. economy, I presented a case in part 1 that “neoliberal capitalism” is the best overall concept for understanding the form of capitalism that arose around 1980. Here, I deal more specifically with the shortcomings of alternative interpretations – focused on the concepts of “financialization” and “globalization,” respectively.

Why Not “Financialization”?

Some economists view “financialization” as the best overall concept for understanding contemporary capitalism. Financialization can best be understood, however, as an outgrowth of neoliberal capitalism. The rise in financial profit, which gave the financial sector a place of growing importance in the economy, came quite late in the neoliberal era. As figure 2 shows, only after 1989 did financial profit begin a long and steep climb, interrupted by a fall in the mid 1990s, and then a sharp rise to a remarkable 40% of total profit in the early 2000s. It was only in the 2000s that financialization fully blossomed. At that time, commentators noted, Wall Street was beginning to draw a large percentage of elite college graduates.

The “financialization” of the U.S. economy in recent decades, important though it is, was itself driven by neoliberal restructuring. The neoliberal institutional structure, including financial deregulation, enabled financial institutions to appropriate a growing share of profits. Furthermore, financialization cannot account for many of the most important economic developments in contemporary capitalism. It cannot explain the dramatic shift in capital-labor relations from acceptance of compromise by the capitalists to a striving by capitalists to fully dominate labor.. It cannot explain the sharp rise in inequality. And it cannot explain the deepening globalization of capitalism.

Why Not “Globalization”?

Like financialization, “globalization” has been presented by some analysts as the best framework for understanding the contemporary form of capitalism. Capitalism has, indeed, become significantly more integrated on a world scale in recent decades, including the emergence of global value chains and a truly global production process in some sectors.

The degree of globalization of capitalism has gone through ups and downs in history. Capitalism became increasingly globalized in the decades prior to World War I. Then the cataclysm of two world wars and the Great Depression reversed the trend, and capitalism became less globally integrated over that period.  After World War II, the process of globalization resumed, gradually at first. Around the late 1960s, globalization accelerated somewhat measured by world exports relative to world GDP, as figure 3 shows. After 1986 the trend became more sharply upward. Thus, in contrast to financialization, which emerged later than neoliberalism, the globalization process in this era began before neoliberalism emerged, although globalization accelerated in the neoliberal era, particularly after 1990.

However, many of the most important features of capitalism since 1980 cannot be understood or explained based on globalization any more than they can be on the basis of financialization. Globalization cannot fully explain the rapidly rising inequality in the contemporary era, which has been quite extreme in the United States yet milder even in some other countries, such as Germany, that are more integrated into the global economy. Globalization cannot explain the financialization process and the rise of a speculatively-oriented financial sector, nor can it explain the series of large asset bubbles. Like financialization, globalization has been an important feature of neoliberal capitalism, but it is not its defining feature.

Neoliberalism as the Key Concept

Both financialization and globalization are fundamental tendencies in capitalism. Financial institutions have an ever-present tendency to move into speculative and risky activities to gain the high profits of such pursuits. Even more so, globalization is a tendency present from the rise of capitalism, since the capital accumulation drive always spurs expansion across national boundaries. Then why do these phenomena characterize one era of capitalism more than another?

Both of these tendencies can be obstructed for long periods of time, or released, depending on the prevailing institutional form of capitalism. Financialization was held in check from the mid 1930s to 1980 by financial regulation, and globalization was hindered from World War I until the 1960s by the world wars, the Great Depression, and then the state regulation of trade and international investment allowed under the post-World War II Bretton Woods monetary system. The neoliberal restructuring starting in the late 1970s can explain all of the key economic developments in contemporary capitalism, with the processes of financialization and globalization—released by neoliberal capitalism—forming a part of the account.

These differences in analysis are  important, since they represent different views of the basic characteristics of the current era of capitalism and different diagnoses of the origins of the current crisis. Proposals to overcome the current crisis that focus only on reigning in financialization or reconfiguring globalization would be insufficient unless part of a restructuring that replaces neoliberalism with something new.

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  1. craazyboy

    I guess for people that don’t have a concise idea of what “neoliberalism” is yet, I’ll offer the following formula:

    Neoliberalism = Financialization + Globalization

    Additionally, Neoliberals need Neocons to keep them safe in foreign lands.


    1. susan the other

      must be why neoliberals focus on trade balances: capitalism = competition = consolidation = monopoly = trade advantages = inequality… or stg like that… and financialism is just hastily put together to grease the skids

  2. Thure Meyer

    I think that even more fundamental is “marketization” as discussed by Polyani. The idea that all of human activity (and indeed nature) can be captured and cast in some sort of market paradigm.

    Underlying all these discussions is the assumption that our current market system is ok. I don’t think it is, since markets are driving society not the other way around.

    We even see the curious inversion of trying to apply something called competitive free markets (whatever that may be) to nature and evolution. Then in a fabulous logical salto mortale, in a circular arguement based on our own projections we impute that since nature runs like a market so does society,

    The analysis needs to be much deeper, at least at the level of primary social organization, its purpose and historaical social anthropology. Elinor Ostrom and her analysis of organizationis and the commons is a good start.

    1. Pepsi

      I appreciate this post, Yves. To name something is to control it, to own it in some sense, it is the Rumplestiltskin, If we don’t have appropriate names, then we can’t think of things as they are.

      Thure, I agree with you. The ideology, the fantasy of the market has penetrated so deeply into the culture that most people can imagine nothing else.

      I’m not sure how to phrase this elegantly, it’s only when we can see clearly the ideology we’re embedded in that we’ll be able to see how artificial it all is, and how easily we could end it and build something better. We have to avoid the sort of false change with radical features of contemporary Burschenschaften types.

  3. William Hunter Duncan

    I think of it as death cult capitalism. For it’s dependence on war making, it’s consumer insatiability in a finite world, and its cannibalization of Institutions, public and private.

    1. Ulysses

      Very well put! The peace and prosperity model– that many of us grew up believing that some capitalists actually believed in– has been entirely supplanted by disaster capitalism and the shock doctrine. :(

    2. hemeantwell

      re “death cult capitalism,” the observation attributed to Fredric Jameson that it has become easier to imagine an apocalypse than to imagine an end to capitalism seems very true. It becomes even more sadly ironic, or maybe just terribly sad, if you consider the likelihood that for a significant proportion of the population the fascination with end times in a distorted way represents their hostility to this social order. Consider how willing Hollywood is to serve up techno-buffed apocalypse instead of films depicting anything other than blatantly criminal antagonism to society. But then you’ve got the Superheroes, acting on our behalf and making us feel all the more enfeebled in the process.

  4. Left in Wisconsin

    More evidence that even many simpatico economists don’t understand the construction and use of ideal types. Also, he is scrambling his US and global perspectives. And reification of markets, which are specific human-made institutions that don’t all act the same.

    There is a much more straightforward institutional analysis of US and global economic changes over the last 40 years that doesn’t require such squishy “global” concepts: Fear of a loss of competitiveness among US business (which through the 1970s was not all that global) leaders and politicians, and a desire to crush US labor (which despite all the post-WW2 “social contract” mumbo-jumbo has never been far below the surface) drove a restructuring of the US economy beginning in the mid-1970s in the interests and direction of the relative (to their competitors) strengths of US firms – financial engineering, ease of corporate restructuring, etc. The same was true in the UK, where the real economy was even more unbalanced than in the US.

    It’s OK to call this neoliberalism I guess, but the notion that neoliberalism is some kind of unshackling of “the market” is dubious. Certain markets were unshackled, others weren’t, and some (drugs, patents, copyrights, etc.) become much more “shackled,” all spelled out in various laws and regulations blessed by the US (and UK) corporate and political class (and their economist agents). During the 1970s-1990s at least, business leaders and politicians in other countries (Germany, Japan, Korea, China to name the most obvious) pursued other strategies that differed substantially from what American and British elites were up to. But it turned out that there was a lot of easy money to be made through financial engineering (compared to the harder task of delivering useful products and services at good value), and so elites all over the globe were drawn toward what originally was a parochial American and British strategy. Also, having a large “advanced” countries like the US and UK pursuing “labor immiseration” made it both easier and more necessary for other “advanced” countries to reign in labor as well.

    1. Oldeguy

      Patents and copyrights are state granted monopoly privileges absent the usual ( think Com Ed’s need to seek approval for rate hikes ) monopoly regulation.
      The ( justly ) notorious Congressionally bestowed prohibition against Medicare’s ability to bargain for decreased drug costs is a perfect example of “reverse regulation”.

  5. Karl Weber

    What about just plain old capitalism? Capitalism seeks to accumulate profit, period. If it can do this through accumulating financial income, by expanding globally, or crushing labor it will do it. This is what I found refreshing about Piketty’s book (and Arrighi’s The Long Twentieth Century too): he demonstrated that the 1930s-early 1970s was a historical anomaly.

    These discussions can be useful, but only to a point. From someone working in academia, I see word choices like these conforming not so much to what is the best overall term, but from what you’re focusing on. Some of us focus more on processes that are closer to “financialization,” “globalization” etc. As someone else has said above, these are just good ideal types.

  6. craazyman

    How about Sweatshop Capitalism

    you gotta sweat if you wanna get competitive

    Hans and Franz wan to Pump You Up! so you’re not a Girly Man economy. To get pumped up you have to lose weight and sweat.

    Neoperspiratory Capitalism for all you academics. You probably wouldn’t want to get near sweat if you can help it. hahahahahah. Layin around all day doing nothing. LOL

  7. Oldeguy

    Possibly helpful here might be the late ecologist Garrett Hardin’s concept of the Problem Of The Commons- i.e. the degrading of a common resource by unregulated extractors. While it is in the interest of the individual extractor that the common resource not be depleted, it is very much in his interest to maximize his individual extraction. The collapse of ocean food fish populations provide a good example.
    Think of the U.S. economy as being like the Grand Banks of Newfoundland, rich source of fish ( profits to be made selling to an affluent consumer population ) , U.S. firms as being individually owned fishing craft, and Globalization ( producing in very low wage, low safety, low environmental protection areas while selling in the affluent USA ) and Financialization as rendering the “fishing craft” much more efficient.
    While the the individual fishing boat captains do not intend the destruction of the common resource, they dare not slacken their extractive efforts. Depletion ( Deindustrialization, the collapse of the Middle Class ) inevitably ensue.
    Pace Adam Smith no Invisible Hand will save the Commons.
    It is Deregulation, a key element of Neolibralism that is ultimately lethal- the Commons must become everybody’s property rather than no one’s.

    1. TheCatSaid

      The Commons is an aspect that is being steadily wiped out by “enclosure” (restricting access to what used to be shared resources).

      David E. Martin has an interesting take on this as it relates to human creativity–something that conventional capitalism encourages us to “enclose” for profit, with little understanding of how this undervalues human creativity. There’s a very good recent paper that mentions this on the M-CAM website, called Putting It All Together.

    2. wryzee

      Thinking about the Commons is exactly why today’s Capitalism needs to be articulated as taking on a new perversity a la Neoliberal or Cannibalistic. It’s not just that market logic desires for the Commons to be economically Enclosed (btw: everyone should read John Clare); it’s that the Commons becomes a hostility to what capitalist logic sees as social equilibrium. Quite literally “helping” is only allowed when it is a waste of time, and anything that actually helps eventually becomes either monetized or illegal. What has been taking place since the financialization of Capitalism (1986 as mentioned above) is nothing less than the-breaking-of-the-world as normative, and there is no competing logic that offers a sustained alternative because everyone has iPhones at the expense of the future (i.e. distracted) or is laboring away into a kind of consumeristic PTSD.

  8. Edmund

    How about NOT CAPITALISM.

    Globalization is just the euphemism for Colonialism.
    Low rate pseudo inflation regulation of Central Banks destroys interest rate relation to risk
    so no lending that is meaningful in regime since Reagan.
    Monopolies rule so no competition.
    First World uses other world’s slave labor and countries to avoid home base environmental regulations.
    So what are you talking about calling any of this capitalism. Ridiculous and ignorant. A tool of this evil

    1. washunate

      Spot on. This has been a fascinating discussion.

      Neoliberalism is not capitalism. No matter how hard academic economists want to blame markets for the errors of public policy.

    2. Norb

      When in the history of the world has CAPITALISM ever been this positive phenomenon you imply to defend?

      Capitalism is the social system where the capitalist class- the owners of capital- seek profit from everything else in the world-Period.

      A system that by definition turns everyone and everything into a commodity to be bought and sold for a profit can only be maintained with propaganda and violence.

      The notion that we can return to the GOOD capitalism is an odd thought.

      1. washunate

        So your definition of capitalism is anything evil in the world?

        There are legitimate critiques of capitalism. But the present evils of our system are not one of them.

        1. Norb

          The social imbalances created by unrestricted capitalism are the root cause of the evils facing working class people today.

          For the past 35 years, supporters of unrestricted capitalism have been promoting the idea that the capitalist class can regulate itself. This notion has been proven repeatably false. The trouble today is that there is no force capable of standing against this movement for monopoly.

          If you constrain the drive for profit with social rules and regulations, do your still have an economic system you call Capitalism?

        2. zapster

          Well no. Capitalism is a system where a relatively small number of people scarf up all the surplus of many other people, generally without any recourse. It’s a form of institutional theft, once ameliorated by the assumption that that surplus would be returned by means of investment.

          But, capitalists are never so noble in practice. Absent high marginal taxes and the business deductions that go with them, they have no reason to ‘invest’ in any manner that returns the surplus to the people they appropriated it from.

          So, while everything that is evil is not capitalism, capitalism really has very little to recommend it. Without draconian and stringent regulation, it simply turns into piracy and oppression.

  9. Kris Alman MD

    Great post. I have been baffled by the use of the term “neoliberalization.”

    What about the “neocon”? Is the neocon the neoliberal who takes advantage of the negative externalities of perpetual war? (Are there Venn diagrams that can explain these neoeconomic terms?) Indeed, how much of our economy is driven by negative externalities? Crises begets predatory behavior, clothed by doublespeak like “opportunity” or “creative destruction.”

    Yet there’s nothing stopping negative externalities because they are included in GDP metrics–the measure of economic “wellness.” After 9/11, Bush reminded that we must shop. Americans are valued as consumers.

    I hate how a patient has become a “consumer” of health care. In health care, “wellness” is just another product to consume. With neoliberalism at the heart of American economics, I can’t imagine there will ever be any real attempt rein in health care costs. We depend on sickness (real and imagined) to keep our economy humming. “Prevention” is the tail that wags the dog as doctors chase more and more false positives and respond to lower thresholds for “abnormalities”.

    The globalization piece is the narrative of “free” trade. Import cheap goods that outsource more jobs and keep prices down to artificially lower the cost of living. The plutocrats’ narrative is that when corporations move into poor countries with jobs this levels the playing field globally. (Never mind their tendency to uproot when those pesky citizens demand better pay and work conditions!) This, of course, takes a huge toll on the environment when we ship goods that could easily be manufactured here.

    It means we extract more resources to create more landfills. And “waterfills” and “airfills”. We use technology to engineer our way out of our big messes. More chemicals are dumped into our land, water and air–with trade secrets obfuscating what these chemicals are and whether they are harmful. Fracking, glyphosate for GMOs, etc.

    Can neoliberalization die of natural causes?

    Maybe we can we bring it to Oregon for death with indignity? (No capital punishment in Texas for neoliberalization… pun intended.)

    You see, I’m getting really worried that we’ve passed the tipping point when economics collision with natural ecosystems is irreversible… And that makes this mama bear really mad!

    1. Praedor

      That is the only thing that is going to kill this cancer. Extraction and exploitation, extend and pretend (ecologically) will continue until it simply cannot. THAT will lead to a massive and near-sudden collapse of the diseased, shambling zombie that is the modern neoliberal system, and with it the entire setup that depends on it (and a LOT of humans). No, not enough will be done to reign in climate change, no, there will be no techno fix (though some will be tried in ultimate desperation to keep the band playing).

      Welcome the coming collapse. The fisheries will return on their own after most humans are gone and no longer sucking them dry. The forests will return after most humans are gone and no longer mowing them down. As the late, great George Carlin prophetically and accurately stated, “The earth isn’t going anywhere. We are.”

  10. William C

    From where I sit, one of the most important developments of the last 35 years has been the failure to prevent the increasing power of monopolies and cartels. The increasing share of income taken in profits by said monopolies and cartels has of course strengthened the position of capital relative to labour.

    So my preferred term for current day arrangements is cartel capitalism. If you want to be more pejorative there is of course crony capitalism and corrupt capitalism.

    1. hemeantwell

      Glad you highlighted economic concentration. That used to be a deservedly emphasized part of a critical analysis of capitalism but for some reason — did we just come to accept it? — fell to second rank or backbench status. Perhaps it got folded into the idea of “multinational corporation,” but that concept more immediately evokes globalization and the mobility of production rather than concentration and the power that comes with it.

    2. griffen

      Monopolies that took decades to split away, over time gradually began to reemerge. I can’t place where I saw this, but there was an article about how “Ma Bell” was split into 10-12 regional bells. Given enough time, we’re somewhat nearly back where that started.

      Plus in 1994, I think, the act passed to Congress eliminating / reducing restrictions on bank consolidation over state lines. Just from my native state, that resulted in WachFirstOvia and Bank of America. (Granted there have been smaller start up institutions using regional executives and regional capital).

      1. Carla

        Tim Wu wrote a terrific book about this drive toward monopoly: “The Master Switch.” Unfortunately, as good as it was, it didn’t stem the tide.

  11. John Hemington

    These posts are an interesting exercise which I find to be almost entirely lacking in critical content. What difference does it make to quibble over the name of the current disaster (neoliberalism it is) if no real attempt is made to explain what neoliberalism is and how it came to be? Professor Kotz’s book may be very good in this regard (I haven’t yet had a chance to read it), but this effort from my vantage point does not sufficiently explain neoliberalism to those not already familiar with it; nor does it offer anything of particular interest to those who are.

    The problem of dealing with neoliberalism is, in my opinion, coming to grips with the history and philosophy behind it — and that is not simply accomplished. Neoliberalism is philosophy based upon deceit and deliberate obfuscation of its goals and objectives. It is not simply capitalism. It is an orchestrated effort to control the power and wealth of the world — and it is, by and large succeeding. Without properly understanding the forces behind and within neoliberalism, I don’t believe that it is possible to formulate any real effort to stem the tide of its successes. It is ultimately a self-destructive formulation, but the level of that destruction may well be something none of us wish to experience.

    Anyone truly interested in understanding neoliberalism should be reading the works of Philip Mirowski, The Road From Mont Pelerin and Never Let A Serious Crisis Go To Waste. Professor Kotz’s book may well add to this, but this posting, I am sorry to day, does not. I in no way wish do denigrate the work of those, including Professor Kotz, at the University of Massachusetts, Amherst as they are among the best in the nation at standing up to neoliberalism and neoclassical economics. I just wish this could have been a more useful post.

  12. scraping_by

    One of the interesting facets of globalization is its dependence on government subsidies. Some are structural, such as social programs substituting for living wages, but many are direct transfers of assets to corporations. Special currency exchange rates, forgivable loans, government gathering of foreign intellectual property, free land, etc, all save the companies the expected business expenses. This is on top of import barriers, local preference buying, and other help.

    The justification is, of course, greater national economic activity/jobs. Americans call this ‘smokestack chasing’, but here its heyday’s come and gone. Partly because states and cities have figured out the math doesn’t work. The government spends far more money than they could ever hope for in taxes, even when the whole enterprise doesn’t go bust. Today, any subsidy a corporation wrings out of the locals is usually hedged with conditions that make it at least look like an even deal. Before, it was a matter of faith.

    Without government subsidies, would the foreign trade portion of globalization exist? Foreign ownership, like any ownership, is protected by government. And that’s a choice, too. But would ‘cheap labor’ or ‘lack of environmental laws’ really make up the difference? Seems global capitalism depends on national boundaries.

  13. joflynn

    I read Mirowski’s “Never Let A Serious Crisis…” two years ago, and as Paul Heideman’s positive review in “www.jacobinmag” concluded, it nonetheless left me wanting for an explanation of just how a set of ideas enamating originally from the obscure Mont Pelerin Society (however influential) could gain such worldwide traction, and seeking perhaps a social-anthropological or political answer to that query. In “The Making of Global Capitalism” Panitch & Gindin point unequivocally to the “pivitol role” of US state institutions (since WW2) in orchestrating (with other elites) opportunities and overcoming difficulties in making the world free for – what Michael Hudson would say – is primarily US “(fiat)-capital” (since the floating exchange rate regime with dollar as key came into effect in 1971). Given the advantage to the US of the dollar as world reserve currency; of the role US public & private institutions in maintaining that status and thwarting any challenges; and the role of the US military in overall guardianship, (and the advantages Panitch & Gindin point out that these factors have given real US industry in maintaining a lead in the more advanced technologies & industries, (and how mutually supporting all these forces are of each other)) I am inclined towards (the intemperate!-) Paul Craig Robert’s assertion that NeoLiberalism is essentially a US imperial project. Like many imperialisms of old, it relies on well rewarded local elites playing their part in the outposts. But the loss of dollar and/or military hegemony would surely lead to a significant retrenchment and a major realignment of world trade & development patterns, not to mention financial flows? Hence the struggles we see today, to retain hegemonic status. The amazing thing is, as playwright Harold Pinter said, how this “imperialism” is accepted as representing “freedom”, “democracy”, “rule of law” – even just the very longterm natural evolution of barter, in the form of modeern “markets”!

  14. Mike Sparrow

    and the real dirty secret is, Americans love every second of it. they are consuming more than ever.

    Capitalism was global from the 19th century until the 1914 when WWI broke out. Before that time, Europe was the modern America and America was modern BRIC. From a Babylon 5 pov, this was the beginning of the transfer from the Brits to the US as the dominate global power. The Axis were the “Shadows” while the Allies were the Vorlons. During this period of 1914-89, capitalism receded back into nationalism and ‘perceived’ threats like communism. The first breakdown in this was the global crisis in the mid-70’s when the Soviet Union got hit by a crippling blow. Another factor was the rising American living standards coupled with mass production still mostly inhabiting the homeland. Capitalism does not do well with rising living standards. It can’t make profit amid dwindling supplies and high living standards. In Hitlerian talk, it needs breathing room. The late 60’s the results were coming in, inflation began to accelerate in the US, driving inflation globally. The end result was the new global period and cheap sources of production to drive consumption in the US via debt.

  15. VietnamVet

    The best insight of the change that started in 1980 that I’ve found is Emmanuel Todd’s. “The United States itself, which was once a protector and is now a predator.” Neo-liberalism is confusing. Predatory Capitalism is reality.

  16. joflynn

    Referring to “Scraping-by’s” comment (above), his/her last sentence is indeed the rub. Panitch & Gindin say global capitalism “pivots” on the central role of the US state in orchestrating other states and their elites to “play ball” (to all elites greater or lesser advantage, but to their absolute advantage within their own state). Mirowski says that while NeoLiberalism’s rhetoric promotes “small government”, it in fact requires much bigger (national) government to intervene and restructure national markets (and to find and backstop even more esoteric “market” solutions when problems occur), all to facilitate international capital. One Chris Wright has some interesting posts on capitalism cannibalising the primary institution that created/nurtured it (the nation-state) – and their possible mutual annihilation if things proceed apace.
    What holds a nation together? Surely a sense of shared something over an above the economy. Tho’ never entirely un-contested, once “settled” the shared narrative of nationhood is celebrated & imposed symbolically, but if needs be, coercively. If too many contradictions impinge on the shared narrative, its effectiveness falters, and may undermine the whole project. (One analysis posits that the Roman Empire fell because peripheral populations felt little common cause with the cosmopolitan elite, and increasingly sided with the barbarians; the Vietnam war was lost because the “grunts” no longer believed in what they were fighting for; the over-arching work/reward ethic/dream characteristic of 20thC US that might have subsumed many discontents appears to be a key commonly-held “national-narrative” now under serious threat).
    Globalisation will continue to need the nation state: in its current manifestation globalised capital(ists) require the nation state as the site where surplus is extracted. Globalisation may falter, or morph substantially – the vision of advanced societies gravitating towards a Western model of individual liberty/democratic institutions now appears myopic, even for Western nations. A BBC Radio4 program earlier this year posited the Chinese “civilisational state” will-out in the end….

  17. Zach Braff

    For those interrogating use of the term “neoliberal” in the comments (and would be interested in its use beyond a strictly economic/policy-descriptive context), I read a good paper by Sarah Brouillette recently questioning the broad use of the word, reviewing a couple specific (literary studies? cultural studies?) books. She’s a sociologist I came across (I think) via Cyborgology

    I think she hits on a very apt/useful definition for ‘neoliberalism’:

    “I think the term neoliberal is most useful as a means of designating particular forms of state support for capitalist social relations and accumulative drives. The accounts of neoliberalism that make sense to me read it mainly as a set of fitful attempts to define and refine policy that will efficiently and effectively secure profitability, and the goal of such policy cannot adequately be described as simply the state’s withdrawal.

    “[…] What I think can be usefully designated neoliberal is precisely the unique set of policy provisions that attend those attempts to secure profitability amidst crisis which became definitive for capitalism from the early 1970s on.”

    Further representative sample of her paper:

    “My basic argument is that the term neoliberalism tends to index reluctance to name capitalism as the culprit in the destitution and immiseration of people’s lives. For reasons I will explore only a little, [..] it is more permissible to engage in a defense of democracy against neoliberal ‘market conditions’ than to suggest that democracy itself is as we know it inseparable from capital and the capitalist state. Critics of neoliberalism write against the encroaching neoliberal market – the marketization and economization of things that were once ostensibly non-market – in ways that encourage market regulation and reform as solutions to the ills of the ‘neoliberal order’. […] There is an appeal to ostensibly democratic institutions that need only be strengthened in such a way as to protect from the depredations of ‘markets’ those crucial non-market goods like water, and nature, and human health and wellbeing”

    “Indeed at times, perhaps especially in accounts of conditions in the higher education sector, … it appears as though the word ‘neoliberal’ simply signals the introduction into one’s liberal enclave of conditions from which one might have thought a certain level of education and privilege served as protection. It is as though the real problem is simply that forms of work whose relationship to economic rationality was more indirect – the professoriate – have been reshaped in ways that threaten their distinction.”

    1. Lambert Strether

      I’m coming to think that neo-liberals think that society is a function of the market. Non-sociopaths believe that the market is a function of society.

      As the last paragraph:

      It is as though the real problem is simply that forms of work whose relationship to economic rationality was more indirect – the professoriate – have been reshaped in ways that threaten their distinction.

      I think there are a lot of assumptions smuggled in to “as though the real problem.”

      1. Praedor

        Well and concisely put. The market, the ECONOMY, should serve the people and server the social greater good. People should NOT be serving the economy and society should NEVER be subsumed by the economy.

  18. Steven

    You could probably find just about everything you need to know about why the world is going to hell reading the work of two authors: Frederick Soddy and Michael Hudson. Throw in a few religious texts like the Bible and the Koran and you will have a pretty good grasp of the modern world. Like nerd-speak in the computer world or the vocabulary used in other professions, haggling over definitions may facilitate economy and improve the quality of communication between the prophets and disciples contending points of view. But it does little to help the lay population understand the fundamental problem dragging modern civilization over a cliff – money.

    Soddy’s problems with the monetary and banking system upon which civilization depends for its money stemmed from that system’s violation of the laws of conservation of matter and energy; specifically the ability of capital (i.e. money) to continue regenerating and increasing itself until the end of time or as he would have phrased it ‘money as a perpetual motion machine’. Hudson’s criticism of that system takes a different slant – the mathematical impossibility of debt to keep on growing forever. (I believe it is finally being accepted that money is in fact a debt of the society on whose behalf it is issued, a claim on its present or future wealth.)

    We are presently in transition from a system based on “debts that can’t be repaid (and) won’t be” to one where the society in question won’t even be able to service the interest. As Hudson notes, this is not really a new problem requiring a new vocabulary to describe. It goes back thousands of years. In simpler times it was addressed with Debt Jubilees. Today we call those ‘jubilees’ Depressions or financial crises.

    In any case, vocabularies (and theories) are best evaluated on the basis of how well they describe what we perceive as reality. So how about this passage from Soddy’s “The Role of Money” (1927):

    The monetary system is not outworn or senile. It is novel, upstart, and imperious, defeating technological progress by turning it into the channels of destruction, and challenging the autonomy not of one nation but of all alike, so that now the original authorities constituted for the preservation of that autonomy needs must fawn upon it to rule at all. Hampered by national frontiers, nothing can satisfy it till the whole world is made safe for banking, that its fundamental insolvency may defy exposure.

    The Role of Money, p. 218

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