Yves here. While Dorman offers an interesting theory as to how neoliberalism gained traction, I don’t see it as explaining as much as Dorman thinks it does. His discussion does not acknowledge that a well-funded effort to turn the country right was underway well before the severe recession of the early-mid 1970s. The key players were extreme right wingers, many of them John Birch Society members, like Adolph Coors and the Kochs. They wanted to roll back the New Deal and were alarmed by what they saw as the demonization of commerce in the 1960s and the establishment of more social programs in Johnson’s War on Poverty. Their seminal document, the Powell Memo, which set forth the vision and strategy for an open-ended, corporate-backed campaign to make the country’s values more business-friendly, was published in 1971, before the 1970s downturn.
By Peter Dorman, an economist and a professor at Evergreen State College whose writing and speaking focuses on carbon policy, child labor and the global financial crisis. Originally published at EconoSpeak
As someone who has looked at the world through a political economic lense for decades, I am restless with the “cultural turn”. Once upon a time, it is said, the bad old vulgarians of the left believed that economic structure—the ownership of capital, the rules under which economies operate and the incentives these things generate—were everything and agency, meaning culture and consciousness, were nothing. The latter was sometimes claimed to be derivative of the form.
Then we had a cultural turn. Now it seems it’s all about consciousness and ideology, of which economic structures are a pale reflection. Neoliberal ideology is said to have seeped its way into the heads of intellectuals, journalists and politicians—perhaps even the public at large—and this explains things like deregulation, privatization and the ubiquity of outsourcing and global value chains. It’s even possible to have 500-page treatises about the failures of capitalism that make no reference at all to the empirical structure of the economy, only modes of thought, as I point out here.
According to this view, the various failings of our society, from the inability to act on climate change to mass incarceration to the imposition of market logic on higher education, all converge as consequences of neoliberal hegemony. But what is neoliberalism? It is usually described as a philosophy, born sometime between the fall of the Hapsburgs (Slobodian) and the postwar convening of the Mont Pèlerin Society (Mirowski et al.), and surely there is truth to these well-documented accounts. But should we understand the past four decades or so as primarily the product of a sea-change in thought, the end result of these precursor currents?
The position I would like to take digs beneath the opposition between structure and agency, the empirical economy and the conceptions people have of it. No doubt the rules and incentives that direct economic life are the product of choice, and therefore consciousness, just as consciousness is strongly influenced by the problems our economic circumstances throw at us and the possible solutions it affords. Shouldn’t there be a coevolutionary process down there somewhere that encompasses both of them?
Identifying such processes is the task of historians, and as we know, understanding the present as history without the benefit of hindsight is an enormous challenge. In my preferred world, this would be the project of political economists, giant armies of them, adequately encouraged and funded. We would see a constant flow of books and articles on the matter, hashing out points of debate. The real world is quite different, alas.
Here is a thought intended to provoke research in this area. How do we understand the timing of the neoliberal turn? In the English-speaking world it took hold a few years before or after 1980, a bit later elsewhere. What transpired to account for this?
A standard narrative is that the Keynesian postwar order cracked up over the crisis of inflation during the mid-1970s. A conservative alternative that trusted markets more and government less was vindicated by events and established its intellectual dominance. After a lag of a few years, policy followed along. One can critique this on matters of detail: economic growth remained stronger during the 70s than it would be thereafter, anti-Keynesians did not have a superior understanding of economic developments, and no intellectual revolution was complete within the space of just a few years. But the deeper problem, it seems to me, is that this attributes vastly exaggerated agency to coteries of intellectuals. Do we really think that the elections of Reagan and Thatcher, for instance, were attributable to a shift in grad school syllabi in economics and related fields?
I propose an alternative hypothesis. From the end of WWII to the collapse of the Bretton Woods monetary system, a large portion of capital was illiquid, its value tied to its existing use. The rich sought to diversify their portfolios, of course, but there were limits. Stock market transactions were beclouded by large information costs, and share ownership tended to be more stable and concentrated. Fortunes were rooted in specific firms and industries. In such a situation there were significant divisions within the capitalist class that attenuated its overall political clout. Industries divided according to policy preferences, and political parties, which were essentially interest group coalitions, attracted different segments of this class. (In the US the Republicans were just as much an interest group coalition as the Democrats, just different interests like small retail business, domestic mining, nonunion manufacturing, etc.) Public policy in this dispensation, whatever its ostensible justification, reflected sectoral influence.
Since the early 1970s capital ownership has become substantially more fungible in every respect. Equity funds of various sorts established themselves as institutional players, allowing individual capitalists to diversify via investment in these funds. Regulatory restrictions on capital movements were dismantled or bypassed. New information technology dramatically reduced (but not eliminated!) the fog of all financial markets. And firms themselves became separable bundles of assets as new technology and business methods allowed for more integrated production across ownership lines. The combined result is a capitalist class with more uniform interests—an interest in a higher profit share of income and greater freedom for capital in every respect. The crisis in real returns to capital during the 1970s, the true economic instigator, galvanized this reorganization of the political economy. (In the US the S&P peaked in 1972 and then lost almost half its inflation-adjusted value by the end of the decade. This is not an artifact of business cycle timing.)
Of course, all understanding of the world is mediated by the way we think about it. The wealthy didn’t say to themselves, “Gee, my assets are taking a hit, so the government needs to change course.” They turned to dissident, conservative thinkers who explained the “failures” of the 70s as the result of too little concern for the engine of growth, which (of course) was understood to be private investment. Market-friendly policy would, it was said, reinvigorate investment and spur economic growth. Keynesianism was seen as having failed because it took investors for granted, taxing and regulating them and competing with them for finance; politicians needed to show respect. It’s understandable why capitalists would interpret their problems in this way.
The other side of the coin was political influence over ideas. Intellectuals who advanced the positions we now call neoliberal were rewarded with research funding, jobs and influence over government policy. When the World Bank and the IMF were remade in the wake of the 1982 debt crisis, this influence was extended internationally. Lending conditionality reproduced in developing countries the same incentives that had shifted the intellectual environment in the core capitalist world.
This hypothesis—and it’s important to be clear that’s what it is—also gives us an explanation for why the 2008 crisis, while it did provoke a lot of reconsideration by intellectuals—did not result in meaningful institutional or policy change: the underlying political economic factors were unaltered. And it implies that further intellectual work, necessary as it is, will not be enough to extricate us from the shackles of neoliberal political constraints. For that we need to contest the power that undergirds them.
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Here’s a comment I wrote, lifted from the thread at the original post. It’s in response to a previous comment that references the postwar reconstruction era.
“I have thought the WWII period is enormously undervalued as a moment of social thought and system-building. The global capitalist class suffered a tremendous loss of power during the 1930s everywhere, even where it was “saved”, but there was no immediate plan for how to restructure on the basis of the new dispensation. I think a lot of that planning took place as the war was waged during the early-mid 40s, so that a system could congeal the elements of experimentation already on the books. This took different forms in different countries, but it was progressive overall in a way that would have been impossible a generation earlier — and was to become impossible two generations later when the class configuration had shifted once more.
“The argument beneath the argument in this post is that the cultural shifts we’ve gone through, like the rise of neoliberal ideology (or family of ideologies) is incomprehensible without recognition that the power and organizational dynamics of the global system evolved to be incompatible with the previous social democratic regime. I’m fairly sure of that. What I’m less sure of is exactly how that evolution took place and what its main constituents are. Exploring that, it seems to me, is what political economy should be about.
“What I’m not happy with is a political environment in which ideas are regarded as prime movers in and of themselves, where “capitalism” becomes a particular bundle of values and predilections and neoliberalism just a more extreme version of the same. It puts the terrain of politics in struggles over consciousness (and therefore the microregulation of individual thought and behavior) rather than over the power to change the rules we live by. Not that consciousness doesn’t matter, of course, but if the most powerful determinant of it is how we live and what constraints we have to adapt to, evangelizing people is not the best way to alter that either.”
“The argument beneath the argument in this post is that the cultural shifts we’ve gone through, like the rise of neoliberal ideology (or family of ideologies) is incomprehensible without recognition that the power and organizational dynamics of the global system evolved to be incompatible with the previous social democratic regime…”
Thanks, this is clarifying for me, and from this perspective it seems the neolib project is still yet to be completely fulfilled as the two parties struggle to define a difference between each other (see chait insisting that there needs to be a border between dem and repub elites even though their interests are completely aligned, for what would happen if the division became seen by the mopes (h/t JTM) to be between the elite and the rest of us, the true existential threat of bernie sanders) with the heavy lifting currently being done by the dem party as they protect the rice bowls of those professionals in the social arena of capitalism, health care and education, as opposed to the business arena claimed by repubs in the form of anti taxation of wealth, unfair distribution of wealth (yes they see Social Security as an unfair distribution WTF) deregulation, etc…whose fight was easily won in the 80’s. As yves points out and you seem to corroborate here, the project started long before we could see the results of it in the ’80’s with reagan and thatcher.
Peter Dorman:
In my not so humble opinion, here is the quote from your writing that you should announce over and over:
In short, we cannot wait till everyone can “be the change” {and note the stress on “be,” which is static, and in this era, pretty much a prescription for stagnation]. Your stress on agency in the main post comes off as a tad buzzwordy. I’d translate agency with your better definition here: “not that consciousness doesn’t matter.” Agency means to act. Agency is just a fancy way of saying “deed.” (To do, for that matter.)
As Walt Whitman wrote, We must march, my darlings.
It’s a good comment and worth re-posting. You’re correct that ‘ideas’ are not the ‘prime movers in and of themselves’. Ideas are like tools lying around the house that you only need from time to time when there’s a major problem that needs to be fixed. To extend the analogy, if a door in my house falls off its hinges for one reason or another. I’m going to be looking around for a set of ideas that I can use like a hammer to fix that hinge and nail it back into place. Keynes and his set of ideas were the ‘hammer’ that was visibly useful to world leaders to bring order to the pre-war chaos. Keynes, himself, being one of the ‘elites’ made his ideas much more palatable. Without such great timing, I don’t think Keynes becomes such a pivotal figure in history, instead of just another thinker who had some good ideas and wrote books. He’d be in the bucket with, say, Thorsten Veblen (another guy with lots of good ideas and an understanding of how society works, but made less of a splash in world affairs).
The policy failures and coordination failures (especially around currencies and commodities as documented by Kindleberger’s book) of the 1930s were so bad that a new structure needed to be set up to iron things out. The creation of GATT, the IMF and World Bank should be seen in this context. Organized labor had made an increasingly large nuisance of itself in the several decades prior, so they had to be accommodated. This was increasingly clear after the war ended, a nasty recession hit in 1948-49, and a wave of strikes occurred in the 1950s. See the lovely graph here: https://qz.com/342311/american-workers-have-pretty-much-stopped-using-their-most-powerful-weapon/
Of course, the USSR loomed over Eastern Europe as the ’50s unfolded, and I actually think the Mexican nationalization of the oil industry in 1938 gets underrated as an episode that scares capitalists into cutting a deal.
I wrote the above paragraph for context because your point that “the WWII period is enormously undervalued as a moment of social thought and system-building” is dead on. But that sort of creativity didn’t happen in a vacuum, of course. The capitalist classes and world leaders had to come to an understanding that big changes needed to occur. Unfortunately, it took a lot of war and revolution to make that happen. I sincerely hope we can do better this time around.
The post-war period stands out because what’s happened since looks like a kind of restoration to the pre-war liberalism….but with more markets/financialization, and more globalization (since the end of the Cold War, and PNTR with China).
I certainly do not think it was one thing, but if there was one thing above all that mattered, it was the decision of the rich to pay executives, especially ceo’s, a whole lot more, and to pay for the ideological rationalization of that policy as a theory of economics and finance. Reducing marginal income tax rates made it practical.
The professional manager, the balancer of many stakeholders, had been at odds with the capitalist, to the end of the 1960’s. Soaring CEO compensation, tied to financialization, set in motion the change that changed everything.
Don’t forget that it was St. Bill Clinton who changed the tax ruling that C-suite compensation could be taken PRE-TAX (the more your company paid, the more it could deduct, and not even the sky became a limit) rather than POST TAX (i.e., profits, in which case, shareholders would scream).
I could be wrong about the details and would love to hear further insights from those more knowledgeable than I about tax ruling history.
Wishing one and all another year of stimulating observation and discourse. Thank you Yves, Lambert and all those out in NC Land.
That did not happen until the early 1990s. It resulted from the LBO wave, where some CEOs got huge payouts when they succeeded in turning companies around. Michael Eisner at Disney was the poster child. A whole raft of profs in MBA programs, with the most effective being Michael Jensen at Harvard, touted the idea that CEOs needed to be paid like entrepreneurs. Of course, that’s BS, since entrepreneurs run the risk of significant loss. Plus the CEOs who showed the best performance, as documented in Jim Collin’s Good to Great, were modest, low profile types who didn’t pay themselves very well.
In the 2000s, Jensen repudiated his earlier work.
Do you think the phenomenal rise of pro athlete salaries from the 70’s onwards had anything to do with CEO rates of pay escalating…
…as if one propelled the other?
There were major leaguers pulling down a million a year by the mid 70’s, when less than a decade earlier after winning the 1965 World Series, Sandy Koufax & Don Drysdale both held out for $500k 3 year deals each (no ballplayers got multi-year deals back then) before the 1966 season but no dice.
The 2 hall of fame legends both accepted 1 year contracts for $125k & $110k.
Meckling & Jensen published their key paper in 1976.
Piketty & Saez make a big point of high-lighting the way in which the top tier of “wage” earners looms large in increasing inequality. Their series shows the first big and distinct bump coming in the 1980s. That a ratchet effect set in and the numbers got really huge subsequently is just evidence for how it became self-reinforcing.
Jensen’s later equivocation is of some academic interest, but it is a little late to have any practical implication. And my point is not that the “idea” as conceived is controlling, but that the practical results of experience for material interests are. In Jensen’s idealistic theorizing, managers properly motivated are producing profit as a return on investment due to efficiency-enhancing interventions or effort; it did not take long to realize as a practical matter that the choices of an executive looking to make a personal fortune from a short time in the hot seat of corporate power might be quite different from the conservative and prudent choices made by an executive aspiring to an easy life, high-status and long-tenure, as prominent prominent c-suite executives did in the 1950s and 1960s. Economists were writing already in the 1980s about hostile takeovers as exercises in the breaking of implicit contracts and the savings-and-loan crisis was underway.
I’m not talking about their academic work as such but when it became received wisdom. A Jensen HBR article was what led to paying CEOs in equity being seen as legitimate, not his earlier papers. And that was because the LBO mavens in the mid-1980s were making some top managers rich, and Corporate America wanted some. And rest assured that the LBO types didn’t consult Jensen in structuring their pay packages.
You are thinking of the article he did with Kevin Murphy published in 1990.
The takeover wave of the 1980s would be good ground on which to test Peter Dorman’s narrative theory, because that would be where and when (and how?) the transition he’s hypothesizing, happened most dramatically.
The takeover wave was heavily analyzed and narrated in real time by economists, including Jensen who had been writing about corporate control issues from before. There’s an interesting and dynamic intellectual history, that i certainly could not summarize in a blog comment.
One outcome of the takeover wave of the 1980s that I wished I understood much better are the changes in the legal protections given incumbent management’s control of public corporations. That, I believe, profoundly affected the bargaining relationship between top management and financial sponsors.
Bruce Eichner or Michael Eisner?
There is no need to talk about capitalism or neoliberalism it is Wealth that matters, wealth as a being with its own trajectory around which names of nations and oligarchs are appended as accidents. Wealth is a mysterious being, it has the will to remain to continue existing and changes agents for its survival continuously. The poor and the rich are the material visible aspect of that invisible being that is Wealth. But being invisible does not mean it does not exist. Wealth manipulates all of us in order to exist and the very rich are as much contingent accidents in the life of Wealth as the very poor. All are necessary for its existence.
To me, it seems moments of true democratic governance are few and far between as the most common and prolific organization of society is the wealthy few at the top maneuvering or manipulating the many poor at the bottom to fulfill the wealthy need to obtain profit beyond their requirements for a comfortable existence. Wealth, control and power are the rewards for the patriarchal system of governance. I say patriarchal because when the goal of the wealthy is finally reached, women will lose whatever gains they have made in obtaining various freedoms (for education, for self-expression, for control of their body, against violence, etc.). I will then know wealth has reached its pinnacle.
“There is no need to talk about capitalism or neoliberalism it is Wealth that matters” — I find this comment a bit odd.
It’s like saying gunpowder matters in terms of ending the medieval period, but not discussing who uses it and how.
When we talk about capitalism, neoliberalism, we’re talking about how wealth gets deployed, by whom, and what it’s being used to do.
To be sure an interesting metaphor worth exploring, but it is easy to point out in this thread that your idea denies agency to the oligarchs who have consciously sought policies to make themselves more wealthy. Wealth has no agency of its own; it has no force that animates it above and beyond the actions of humans (aside from the spectral “mysterious being” that drives an oligarch to endlessly seek more of it).
We believe, at least I do, that I own my wealth but functionally my wealth owns me. I work incessantly to preserve it. And I notice that everyone does the same. Wealth is the source of total disquiet, wars are carried out under the pretense of defense to preserve and increase it. But wealth is totally immaterial, as soon as we look at its actuality it vanishes as Eurydice vanished when Orpheus looked at her. It exists while it is imagined. Wealth persists but its owners are simple accidents. The Painting remains but its owners change time and time again. That is part of the mystery.
I believe that I own my wealth but functionally my wealth owns me. I do what it wants, as any other being, it wants to persist and I work to preserve it. But when I look at its actuality it disappears as Eurydice vanished when Orpheus turned around to see her. When Wealth is materialized it persists for a while, changing owners, eventually it may disappear but other materialization will have taken its place. Wealth remains, she is mistress, oligarchs and people in general are her slaves. The slaves have no other possibility than working incessantly for Wealth because she is quantitative and either she increases or disappears. It is difficult to understand what is absolutely immaterial like gravity or magnetism or electricity or life itself. We know their manifestations but we don’t know what they are in themselves.
Thanks to Yves for her comments prefacing this post. Nancy MacLean’s “Democracy in Chains” covers much of the territory to which Yves refers.
I agree with Yves here. The beginning goes way back before the 1970’s. I’d suggest back to 1944 when Henry Wallace, by far the second most popular politician after Roosevelt and an working man’s progressive, was pushed off the Democratic Ticket for VP. Wealthy powers within the Democratic party were not going to let Wallace follow Roosevelt into being President. The 1970’s just created a political climate to galvanize the rich and powerful, but there had already been a ton of ground work done before. Those “conservative” thinkers had already for years been on the dole concocting stories for their masters.
From what I have seen, wallace would have really derailed the current course of history. His being cheated out of the nomination in 48 was one of those “roads not taken”. Who knows what might have been. The world is suffering things like that.
I, too, see the political deposing of Wallace in 1944 as key to much of what has happened economically ever since. The necessity to gear up rapidly for WW2 propelled an unprecedented marriage of government money and private enterprise that coincidentally led to unprecedented growth and profits for private industry.
Wallace would have put an end to that at the conclusion of the war. Truman — a not very bright guy over-impressed by generals and the wealthy — allowed both to propel a continuation of the unholy marriage. The manufactured “Cold War,” both in its old definition and ever-evolving definitions, allowed the MIC to metastasize into the monster it now is.
The lesson was not lost on every other executive of every other major industry, and so the billion dollar Washington lobbying business was born and with it an even bigger, uglier marriage of government money and private industry. Which is where we are.
It remains inexplicable to me why Roosevelt, who surely knew how ill he was, capitulated so casually in the nomination of Truman, who he just as surely knew did not believe in much of anything that the New Deal stood for.
Adlai Stevenson could’ve been something, but the people were tired of the Democrats vis a vis Truman, and look over there! a war hero.
…perhaps not so much a revolution, as a contagion….
Part of the difficulty in discussing this subject is the widespread assumption that neoliberalism is “new”, and had to be imposed by force or by discourse or by both. In fact, as I’ve argued before, neoliberalism as a doctrine and and practice, is really just liberalism with the gloves off. The real question, then, is why the gloves came off, or were allowed to be removed. Liberalism has always been about competition between individuals to have the maximum personal and financial autonomy. The duties of the state are limited to safeguarding private property and enforcing contract law. The state itself is seen as a simple provider of services, tolerated for as long as it provides those services more cheaply than other actors. (I know that in the US some people who would be called socialists elsewhere called themselves liberals out of self-protection, but that’s an anomaly that doesn’t affect the argument )
For most of its history, liberalism had to compromise with other forces that limited its radicalism. Originally this was absolutism and the royal prerogative (Locke had to flee England to avoid arrest it will be remembered ), then 18th Century religion, then the influence of the Enlightenment, then the influence of non-comformist churches with a social conscience, then fear of insurrection and revolution, then fear of the strong Communist parties in France and Italy. By the 1980s, with the progressive weakening of these Communist parties and the relative decline of the Soviet Union, traditional liberalism began to reassert itself, and with increasing speed after th Cold War, when there was nothing to be afraid of any more. Neoliberalism was always there, just waiting for the moment to impose itself.
This did not happen (and here the author is entirely right in my recollection) because of changes in the modes of thought. Indeed, relatively little changed in the 1970s and even the 1980s, except that public opinion moved slightly to the Left as the years passed. The 364 economists who wrote an open letter to Thatcher in The Times at the start of her reign demanding a change in policy were widely mocked at the time in the right-wing media, but in fact they represented the (broadly Keynesian) consensus among economists at the time. Thatcher’s election was not a triumph for new ideas (neoliberal ideas were hardly mentioned in the 1979 manifesto) and privatisation actually began as a panic measure in the face of a catastrophic economic situation in the early 1980s. Indeed, if the Labour Party had not elected to commit suicide by splitting in two, Thatcher would have been out in 1983, and privatisation and much of the neoliberal agenda would just have stalled, in the UK and elsewhere.
So it’s really about wealth and power, and seizing political opportunities. What Gramsci said about the war of position is certainly true, but he never suggested that discourses could win struggles on their own.
I like your historic vision and agree with the causes explaining the rise of neoliberalism.
David: Compliments. An excellent analysis–which is why it is important to take into account points of view that aren’t from the Anglo-American echo chamber.
Further, the Italian Constitution begins with the famous assertion that Italy is a republic based on labor, which is an assertion that sets out to undermine (neo)liberals and fascism. It has taken considerable effort by the Italian neoliberal right (Lega and Berlusconi’s gang) to undermine this position. Of course, Renzi and the PD were only too glad to help. It isn’t hard to diagnose Italy’s distemper if one takes into account what you just wrote.
And of course you have also explained the rise of the Gilets Jaunes, who are taking “agency” without yet putting together a platform. Yet they are a living critique of this sloppy neoliberalism and its greedy rightwing allies.
“For most of its history, liberalism had to compromise with other forces that limited its radicalism.”
Not so overseas. See the British East India company, for instance. In fact, I see the EIC as the Ur-neoliberal corporation, and the privatisation of Bengal the “Greatest Neoliberal Success” thus far. (See Burke and Smith’s reactions to it.)
it seems that since the 70’s the “fruition” of neoliberalism that is characterized by the deregulatory policies that started with carter, and have snowballed ever since. Are really more tied much older communities.
When fred koch ,and others were fomenting john birch society rabblerousers with the stories of “conspiracy” by the likes of the council of foreign relations and royal institute of international affairs, they weren’t totally wrong. I think it is interesting that the koch family started with actually developing a better way to “crack” oil and make petroleum derivatives. The standard oil coalition didn’t want the competition and unfairly drove them out of business in this country. What the elder koch did was to go to the soviet union in the thirties and built the oil industry up for stalin. That is the source of their family fortune. When they came back to this country, they began to attack their old adversaries, the standard oil concerns, the rockefellers),bakers,buckleys, pratts, etc.(james baker,george PRATT shulz,william f buckley.all in those families among many others). The kochs may be one side of a coin, but really they have just copied what was already done before them.
The real neoliberals were the bankers like the morgans, rockefellers,mellons,duponts,etc. the old robber barrons. Them and all the council on foreign relation groups, which were hundreds of the wealthy elite with generations of money behind them. They were formed in 1919. And the british version , the royal institute of international affairs(chatham house) was created at the same time by an earlier british group.
That is why people have been thinking this is some kind of conspiracy for a hundred years now.
In the thirties people were writing that the areas of law, education, politics, and media were being cornered by these peoples opinions. This is true in my opinion. What we have now, seems to be after a long time of “softening up”. These people seem to be moving the united states into a realm of thought more akin to the british way of doing what they are told. Of those with money being more important and thus deserving of immunity from their “vices”. creating a class sytem, where there should be none.
Now the post 70’s version culturally does seem to be all these elite who were unhappy with the new deal in the first, and the final straw was in the hippy attitudes that came out of the sixties.
The business practices were just as related to what was happening with resource scarcity, loss of colonial spoils,new rights for some, all just going in the directions they could. but the concentration of wealth was where they were trying to get back to.
But even if it is just a community of interest, with a non certain objective. just the result of the groupthink that comes when only those who agree with each other are connected to powerful networks with as many resources as could be imagined.
As john ruskin who was the inspiration for the original british group, was talking about. It was to save the aristocracy from all the great unwashed who ,by demographics alone, were going to be “the masses”, and could take over if not properly guided.
‘The wealthy didn’t say to themselves, “Gee, my assets are taking a hit, so the government needs to change course.” ‘
Well yes, actually they did. Probably not so much a conspiracy as fellow travelers funded by some very wealthy people. For nearly half a century now there has been an effort to change the laws and culture of the American people and make it that business calls all the shots. As an example that comes to mind, take the legal structure in America.
In 1976 the Law and Economics Center, a corporate-funded academic organization, was set up by Henry Manne with the purpose of indoctrinating future judges with conservative legal theories thus ensuring corporate friendly decisions. The 2014 Supreme Court decision to remove the political donation cap in elections may have been influenced by this indoctrination of the judicial culture. Combine that with organizations like the American Legislative Exchange Council (ALEC) writing laws for the States and you have justice going on the back-burner in American law courts with corporations having the odds stacked in their favour. We all saw how that all worked out for mortgages after 2008.
Now extend this to other areas like schools, universities, finance, economics, industry and that is what we are seeing come to fruition is this half century effort. It is the reason why the American worker is basically receiving the same pay as his grandfather did back in the 70s. I am afraid that the good professor that wrote this article should forget about things like processes and regulatory & technological changes but instead start looking hard at the network of people and organizations which have actually carried this all through. He should start looking at places like the University of Chicago and George Mason University for a start. Just my opinion.
The reason I don’t buy this theory is “the wealthy” back then weren’t a political force. This is projecting our wealth/income inequality back to a time when it wasn’t consequential. For instance, the big individual stock investors in the 1960 and 1970s were doctors. Do you seriously think doctors were lobbying for economic policies ex as it related to medicine?
The parties that were pushing for these changes were corporate executives and some hard right wingers. And if you read what they wrote at the time, it has much more to do with what Kalecki wrote about his classic 1944 paper on the barriers to achieving full employment, their status, than their wealth. These guys didn’t like that people who ran businesses weren’t held in high esteem and that business (part of “The Establishment”) was under attack.
I’m not so sure that the wealthy weren’t at the very least a cohesive force in the 20th century who ran a lot behind the scenes. The Social Register certainly informed people who was in and who was not. Being large enough a population to show a bell curve in political opinion, there was always a hard right section that demanded that their demands be taken account of. It was from this section that arose the Business Plot of 1933 that Smedley Butler took down. There is a lot of denial that it actually happened these days but the evidence shows that it was serious. I will put myself on a limb here and say that a lot of the fuel for these corporate executives, hard right wingers and the like were the sky high tax rates on wealthy people during this era which, I believe, peaked at about 94% for those earning over $200,00 or more in 1944. This was something that all wealthy people could agree on which led them to funding efforts to wind back the federal government. Just my opinion though.
Many people on the Social Register were people from old families with not much or no money. In fact, one of the characteristics of old money is frugalness because whatever wealth there was gets dissipated in a mere couple of generations with reasonable survival of heirs. The Kennedy scions are a great example (I briefly consulted to one), great name, only enough $ to be comfortable.
And old WASPs do not talk about money. Even more verboten than talking about sex.
I also agree that looking at the people who are behind the institutions is completely justified.These people were all characters in their own systems. These people together created , then modified the systems we use to this very day. The big picture is it was a sort of conspiracy. The everyday details is it was a free for all, with in-fighting,catastrophe,unintended consequences,non-conformists and everything else. This mayhem is what is always pointed out as to why it wasn’t a conspiracy, but really the game was rigged. That doesn’t mean those who rigged the game never lost. It is just nature. But it is true, as is shown by our loathsome orange leader… “those who win a rigged game for too long get stupid”
My specific definition of neoliberalism, may be not quite right…but. The picture shown in carroll quigley’s “Tradgedy and hope, a history of our time “1895-1961”. Which is an economic history of the events and people who were influencing the northern hemisphere… and thus the world.Shows that people very much decided the policies that the levers of power then carried forth. The people were whimsical.But aligned.
One reason I always say political science is as useless as economics is that people don’t act as if personality comes into play with policies or levers of power. They act as if the world is perfect and the law/rules are applied as if in a vacuum where no external personal forces are at play. And that is so blind to reality, it is an achille’s heel of the entire discipline.
p.s. lets not forget about that dammned federalist society.(not until the eighties, but another group that was formed to derail truth justice and the american way)
I would say rather, intellectuals who advanced the positions we now call neoliberal were created out of whole cloth, as were the research projects.
The intellectual environment did not so much evolve as was supplanted by the army of neoliberal
orcs manufactured by the rich and powerful who felt repressed by the New Deal, and who had been working tirelessly since its inception to do away with the constraints it placed on their ability to project power.
The New World Order did not come into being by the clever use of incentives, or lending conditionality, it would be more accurate to say that it was imposed with firearms and high explosives.
Allende and the people of Chile weren’t swayed by incentives, the incentives appeared after the murder and mayhem.
As far as that goes, these ‘incentives‘ should be recognized for what they really are, and that is rules.
There is much to be said for striving to understand the relatively recent history which has brought us to the current social/economic/environmental crisis, but there’s also something to be said for a much longer view. Writing in the late 19th Century, delineating the pitfalls of capitalism and anticipating the global plutocracy looming in the distance, Edward Bellamy talked about “the rule of the rich,” which had been in place since the demise of the early agrarian village. Whether as slaves of ancient empires, serfs of feudalism, or wage-slaves of capitalism, the impoverished many had served the interests of the wealthy few throughout recorded history, and the pattern of submission to wealth and its associated power had accordingly become deeply ingrained into human consciousness, as the way things simply are and are meant to be.
The only antidote to these millennia of social conditioning, Bellamy believed, was the idea of democracy, which had made a fitful appearance among the wealthy in ancient slave societies, but had really been born, albeit only partially and ideally, in the American Revolution. Read again the Preamble to the Declaration of Independence–give the words a liberal, living interpretation as opposed to a strict historical construction–and Bellamy’s fundamental point becomes as self-evident as the sacred equality of all persons, the inherent rights which flow from this equality, and purpose of government as an instrument, created by the people, to secure that equality which both undergirds and expresses those inherent rights.
In short, the polar opposite, the mortal enemy, of the consummate “rule of the rich” which we now call neoliberalism, is democracy–not the faux democracy we know today but full-blown democracy, which embraces not only the political arena but extends itself boldly into the crucial economic arena as well.
Only in a democracy can a collection of people live together in harmony to solve their life problems in a way that can be called just. However, since human societies are not static, the constant strain of daily living seems to produce an evolutionary force that leads to tyranny.
Are these cycles of civilization? The rise and fall of societies moving from democratic freedom to totalitarian tyranny? The renewed search and need for freedom and justice brings down totalitarian regimes who’s greed and hubris are unsustainable against such determined resistance? It would seem to be so.
The pressure point in this system is wants and needs. If people’s conception of the world is that we live in a world of scarcity, then the struggle for grabbing those resources only ends with the exhaustion of resources. This makes current humans no better or evolved than other lifeforms- probably worse because we seem to have been given great cognitive abilities.
The cognitive leap that need to be undertaken is that humans potentially live in a world of endless abundance. We live in paradise NOW– if only we can collectively move past the seemingly contradictory appearance of living with scarcity. It is overcoming a paradox.
Tyranical elite live in this paradise at the expense of all others. The trick is to reach a point that All are happy and prosperous. If not, these seemingly endless struggles will eventually grind down the human race. Our species will no longer be fit for the environment that confronts us- so we will perish from the earth.
The cycle- or circle will be broken.
The most radical and profound point made by Bellamy, utterly convincing only if one takes the time to engage with this two seminal works free to read on the web, “Looking Backward” and “Equality,” is that full and sustainable democratic freedom cannot exist unless EVERYONE is made equally economically secure. Leave the smallest degree of economic disparity, where some are richer than others, and that difference will translate, however gradually, into increased political power. Then, as that power is inevitably exploited and expanded, it will again sow the germinating seeds of “the rule of the rich,” which we now see in its maximized glory of neoliberalism–obscene want juxtaposed with insane excess. For Bellamy, the Golden Rule was not only personal moral guidance but bedrock economic policy.
For those not aware, I would highly recommend David Harvey’s, “The Enigma of Capital and the crisis of capitalism,” as offering a clear analysis of the topic on hand- namely, how the heck did we arrive at this place in our lives.
What is needed is a broad perspective of the underlying forces directing our lives and Harvey gives one. All too often, the broad critique of capitalism is obscured by narrow details. Those wishing small changes to the system fail to grasp the systemic nature of the problem, so their efforts merely deflect problems, not solve them.
An interesting conception in the book is that human life and society can be broken down into seven activity spheres- each dependent and influential on the others.
1. technologies and organizational forms
2. social relations
3. institutions and administrative forms
4. production and labor processes
5. relations to nature/ geography
6. reproduction of daily life and to the species
7. mental conceptions of the world
Taken as a whole, these activity spheres determine what type of society or civilization is created and sustained. They become a tool for making sense of a complex system that is human society.
Pressure points can be found and influenced in each sphere to direct the course of history- human development. Yves point about the Powell Memo is very appropriate. It is important to have a clear idea of where you want to go, and then make your plans to influence and achieve that outcome.
One must think strategically. I would argue that until the effort is to move society beyond capitalism, humanity is doomed. While the capitalist elite plan for their lifeboats and hideouts from coming natural collapse, a different plan must take shape. On that is not based on despair, but on creative energy to surmount the contradictions and evils of capitalism.
some are making plans to move forward.
the green party has realistic efforts underway to discern the path forward. One of its planks to create a better democracy is monetary reform. But they realize we can’t get there from here. There needs to be national awareness of the problem, so that the proposed solution has a serious chance of addressing the problem. Multifaceted as it is.
The green party “greening the dollar” is a part of moving forward.
When dennis kucinich proposed HR 2990 in 2011 and 2012, “the NEED act”, It is a direction to go.
more people really need to be aware.
Currently, I’m writing a book titled, “Whose City Is This? The Struggles To Determine Detroit’s Future.” The conventional wisdom in mainstream media, the foundation community, and government officials and politicians is that Detroit is finally undergoing a viable renaissance. This so-called revival of the city is proceeding according to neoliberal principles (in short, privatized, market based “development” typically made possible by government funding, tax breaks, deregulation, virtual land giveaways, and ceding of public authority to hybrid public-private entities). These neoliberal manifestations are not subject to examination, debate, or reconsideration because neoliberalism functions like a cosmology, that is, a socially shared belief system its adherents do not experience as belief but as obvious, natural truth.
I offer three worldviews that offer a divergent path to the future for Detroit: one (as yet unnamed) based upon MMT, Hudson’s discussions of debt, and Billy Mitchell (an his coauthor’s), Reclaiming the State, a third based in Marxism (which is held to be based upon overthrowing capitalism because it is inherently rooted in exploitation and expropriation), and a fourth worldview, which can be recognized as Overshoot, Limits to Growth. My main argument is that, pace T. Kuhn, these worldviews are incomprehensible to one another. I then present scenarios laying out the logic of each worldview. In my view neoliberalism is politically/culturally hegemonic yet ecologically and thermodynamically unsustainable –two ideas neoliberalism cannot even conceptualize. It will fail but very likely fail as it simultaneously does great harm and damage to the humanity and the earth’s biosphere.
Without defending Klein, I think Doorman does not understand the logic of overshoot and limits to growth.
The story of what reactionary conservatives did to fund and drive the rise of right neoliberalism is only half a story. The New Deal in the U.S. had created a political economy of balanced and opposed interests. Neoliberalism and its ancestors go way back, but before circa 1980, they were effectively opposed or fragmented among themselves.
Two critical parts of the story:
1.) The emergence of left neoliberalism from the collapse and/or surrender of the various forms of working class and New Deal liberal opposition to the programs and desiderata of the wealthy classes. Charles Peter’s Neo-liberal’s Manifesto from 1982 expressed the weariness with the stalemate of New Deal politics the chattering classes were so eager to abandon, in favor of adopting the vocabulary and frameworks of neoliberalism. The centre-left wanted to argue with Milton Friedman on his terms just as they want to argue now with Tyler Cowen.
2.) Financialization and globalization centralized and homogenized big business, but most especially Media and Finance. The New Deal had deliberately created a complex and fragmented financial sector and media sector. The policy program of the capitalists was relentless in creating universal giants with common strategic control of firms that ought to be opposed in the market as competitors and in politics as interest groups. But, aren’t anymore.
Do people know what they are doing, when they push ideology that rationalizes policy that changes economic structure? That’s one way to phrase the more general question — how do ideas matter to economic policy and structure, and vice versa? — at the center of Peter Dorman’s musings.
If you take the purposes pursued by material interests in politics too seriously, and the associated rhetoric not seriously at all, you reduce Movement Conservatism to a backroom conspiracy. I am not sure that isn’t more justified than is commonly admitted in corporate-Media-filtered public discourse. Even without the filter, the rhetoric of ideology functions in part to hide motives of material interest behind the curtain of at least a pretense of concern for the public good. There may be ideological extremists who will enjoy exhibiting more naked bad faith, but the Media will obscure the implications for the true intent of “moderates” who must be kept within the overton window.
Honestly, though, some very effective ideologues seem very nearly delusional. Think of figures like Jude Wanniski, the Wall St. Journal editorial writer who promoted Arthur Laffer’s infamous “Curve” and battled for control of Reagan’s alleged mind. You can create a very dignified narrative of the neoliberal policy revolution if you focus on Milton Friedman making a Presidential address to the American Economics Association on stagflation. Arthur Laffer drawing his curve on a napkin for Jude, Cheney and Rumsfeld, on the other hand seems threadbare . . . “Ideas” on this level barely cover for material interests; if anything they focus attention, like putting a g-string thong on a male stripper.
If such narratives succeed in rhetorical ideaspace and the policies that accompany them, succeed (for some purely functional, political science definition of ‘success’), it seems to me you need an idea of nearly blind evolutionary selection. The explanation cannot be a matter of architect, intent, result. Political society as an echo chamber for ideological discourse and political economy qua a system are more chaotic that that. There is no singular, coherent architect or architectural concept — policy is moved by a scrum like rugby; ideology at its most effective is a coordinating framework only and being “right” or “truthful” may not matter. And, the political economy as a system is for most people a vital and personal experience with mysterious and unpredictable origins, like the weather; they do not understand it or the arguments about it — they vote their satisfaction or dissatisfaction with the experience en total, including anxiety and uncertainty (of which there is never a shortage since they really do not understand what is going on).
In a process of at least semi-blind evolutionary selection, the success of a policy program has to be explained in part by what it was up against, both in terms of “environmental conditions” and alternatives on offer.
Just considering the academic economics on offer from the neoliberal right in the 1970s, it is worth noting that some of the big ideas did not survive contact with reality. Milton Friedman’s revived Quantity Theory of Money failed the test of Volcker’s administration at the Fed; Robert Lucas’s New Classical macroeconomics and Robert Barro’s new Ricardian equivalence were quickly disproven by the shape of events. The new Financial Economics of the efficient-markets-hypothesis and (Meckling/Jensen) maximizing shareholder value lasted much longer as seemingly powerful ideas, but it is notable that even Lucas and Barro and their ideas were seemingly unaffected by the empirical failures of those ideas.
Explaining academic success despite intellectual failure has to be attributable in part to the even more abject collapse of alternatives. I suppose that can be traced to material causes; there simply was not the financial support for career paths that traveled more honest paths. While, of course, there was a lot of private foundation money available to the ideologically committed or flexible. There were a lot of John M Olin Foundation fellowships studding the cv’s of economists starting out in the 1980s. Business schools were an expanding field of opportunity for economists, but business schools had a constituency among corporate managers and their employers.
But, there’s also the business ecology at work in any given time and place. Neoliberalism in the 1970s and 1980s was strongly aided in its demolition work by seemingly “inevitable” dynamics of economic development. Bretton Woods, mentioned by Peter Dorman, exceeded its sell-by date. The center-left economics establishment was seemingly caught by surprise though the timing was eminently predictable. There was no politically credible proposal from the Left and Friedman, of course, had a typically glib story about market-exchange rates.
The story of Thatcher’s TINA in the UK is particularly stark: coal and steel were going away. And, the Labour Party, its politics organized around the economic structures of coal and steel was seeing its foundations eroded away and had no idea how to respond. Thatcher did not cause the inevitable decline of coal and steel; she saw her opportunities and took ’em, as they say.
Something very similar was happening in the U.S. with steel and autos, but there was more apparent policymaker volition involved, since trade policy was an instrument of that demolition. Volcker’s extreme interest rate policy served to create the crisis of disintermediation that made “reforming” the savings and loans out of existence a plausible policy choice. Superficially plausible only; the failure to oppose or effectively criticize a policy that would predictably drive massive criminogenic fraud does draw attention to the absence of effective economic policy analysis and advocacy on the left or even from the center.
Thanks Bruce. (Nice to see you here.)
The bottom line is this. Change happens when we lose faith in something. Real power vanishes once belief is gone and the time for change could not be more ripe today. Everything is fraud! Economics is fraud, elections are fraud, Wall St is fraud, MSM is fraud, religions are fraud, etc. The “best and brightest”… at deception. Some meritocracy.
The massive mismanagement of government finance is revealed in this four-part RNN series on the decades of fraud abuse in the MIC, as an example.
The end of the TINA regime is nigh. MMT presents a clear and cogent antidote, one that has always been available to us, but for lack of political will.
“To which the rest of us can only respond, Haven’t you people done enough harm already? We have narrowly avoided a global depression and are mercifully pointed toward merely the worst recession in a long while. This is thanks to a global economic meltdown made possible by libertarian ideas. I don’t have much patience with the notion that trying to figure out how we got into this mess is somehow unacceptably vicious and pointless—Sarah Palin’s view of global warming. As with any failure, inquest is central to improvement. And any competent forensic work has to put the libertarian theory of self-regulating financial markets at the scene of the crime.
The worst thing you can say about libertarians is that they are intellectually immature, frozen in the worldview many of them absorbed from reading Ayn Rand novels in high school. Like other ideologues, libertarians react to the world’s failing to conform to their model by asking where the world went wrong. Their heroic view of capitalism makes it difficult for them to accept that markets can be irrational, misunderstand risk, and misallocate resources or that financial systems without vigorous government oversight and the capacity for pragmatic intervention constitute a recipe for disaster. They are bankrupt, and this time, there will be no bailout.”
Virtually every policy position of this new iteration of the dems is due to the Sanders movement. All the policy positions once thought unthinkable – thanks to Bernie – now have the feeling of the inevitable. ~ John Cusack
I long ago formed a view of capitalism that regards it as similar to fire. It is a powerful force which can warm our home and cook our food. In short, it can be very useful, maybe even essential, but ONLY if it is kept tightly controlled. Fire has no conscience, it only wants to be fed, and it always demands more. Before one brings fire into their home, one builds a fire-proof containment vessel. When designing this fire-box we do not let ‘fire’ decide how thick to build the steel walls or how tightly the gaskets fit. ‘Fire’ does not even get a vote.
We have given in to the demands of ‘fire’. We have sacrificed all the furniture. We have allowed fire to escape the box and become the master. The house is burning down, the roof is gone, the walls are burnt almost to the substructure, and our very foundation is at risk. Viewed in this manner, everyone, whether or not they are totally anti-‘fire’, can understand the urgency of getting the damn thing back in the box. ~ Anonymous
I like the fire analogy
The struggle between structure and ideology. If Dorman is correct and structural economics is something akin to instinct or reflex and ideology follows later trying to make meaning out of it (sounds right to me actually) then in order to look at how to fix the economy we have to look at some basic human behavior. The scaffold we currently use is profit from growth. Which is redundant – like saying profit from profit or growth from growth. Which is circular and which feeds upon itself, expanding without much adaptation to reality. We can discuss instinctive behavior, capitalism, as something which needs to be contained and focused for various purposes. But we can’t, haven’t ever, seen all the pitfalls. If the 1980s broke the liquidity barrier in something like a new gold rush for profits, it also broke the containment wall we were using to contain population growth. And it allowed externalization that polluted the planet exponentially while the objective, profits, accumulated at a much slower rate. All this behavior was blind, knee-jerk, insecure and thoughtless. The ideology of thoughtlessness? Who want’s to claim that? What would be valuable would be a way to achieve a new method of growth and a new definition of profit put toward a sustainable goal. That requires enough honest self awareness to actually put an ideology forward that fixes things. It certainly is not impossible. In fact, it will happen one way or another. Maybe we should think of capital as cockroaches. They’ll eat anything, even money. And they are a pure, instinctive force of nature. Think of capital as a process not a store of value?
Thanks Susan
====If Dorman is correct and structural economics is something akin to instinct or reflex and ideology follows later trying to make meaning out of it (sounds right to me actually) then in order to look at how to fix the economy we have to look at some basic human behavior===
This reminds me of the development psychologist Robert Kegan’s stages of development. Two of his early stages the impulsive self and the imperial self are related to instinct or reflex. A middle stage called the institutional stage is related to ideology.
Kegan’s belief is that most adults are in the institutional stage with some adults in the imperial stage. I agree with Kegan but in day to day life I also see more adults who are regressing to the imperial and impulsive stages. Recent NC posts describing the people involved in CalPers, Brexit, etc. seem to show people in high levels of business and government with a lot of immaturity ( i.e. imperial/impulsive).
I agree with you that if we want to fix the economy (and the world essentially) we have to look at human behavior and start raising and developing better adults. The last 40 years (the neoliberal era) we have focused adult development on the cognitive traits, skills, jobs, etc. but have lost our way in terms of human development.
To reach higher levels of development we need to have all levels of school focus not just on STEM but on areas that will foster human growth such as the arts, literature, music, theatre, etc. And return college to more liberal arts and a place to develop and explore and learn and grow as a human.
We also need a more reasonable cost of living in society to allow “starving” artists, writers, poets, and musicians to reclaim there place in society as a counterbalance to the solely “economic” pursuits. If Shakespeare were alive today he would never have been able to write Romeo and Juliet as he would have been too tired from working 12 hour shifts at an Amazon Fulfillment Warehouse!
It’s the failure to fully examine economic theory in “informational” terms that’s allowed Neoliberal dogma its advancement. Hayek’s price signals as information advanced the argument for free market capitalism but hardly anybody thinks control over the deployment of capital is control over information!
WTO AGREEMENT ON SUBSIDIES AND COUNTERVAILING MEASURES
Members hereby agree as follows:
PART I: GENERAL PROVISIONS
Article 1
Definition of a Subsidy
1.1 For the purpose of this Agreement, a subsidy shall be deemed to exist if:
(a)(1) there is a financial contribution by a government or any public body within the territory
of a Member (referred to in this Agreement as “government”), i.e. where:
(i) a government practice involves a direct transfer of funds (e.g. grants, loans,
and equity infusion), potential direct transfers of funds or liabilities (e.g. loan
guarantees);
(ii) government revenue that is otherwise due is foregone or not collected (e.g.
fiscal incentives such as tax credits);
(iii) a government provides goods or services other than general infrastructure.
https://www.wto.org/english/docs_e/legal_e/24-scm.pdf
So much for MMT being allowed to ameliorate the worst excesses of capitalism under Neoliberal hegemony!
MMT doesn’t propose to “ameliorate” anything; it’s merely a description of how money really works in the economy.
“MMT doesn’t propose to “ameliorate” anything; it’s merely a description of how money really works in the economy.”
That’s nonsense! It allows demand to be better managed. Read some Lerner again! Indeed why bother with it at all if it’s not prescriptive as well as descriptive?
That is why people have been thinking this is some kind of conspiracy for a hundred years now.
I agree, probably longer.
Websters second definition defines conspiracy as “to act or work together”.
One (I, at least) can not look at the historical record of marriages within the European and American Aristocratic families without thinking more than love was involved.
And the wealthy had an education and the affiliations that came with that. And they had time free from the daily grind so, yes I can believe:The wealthy didn’t say to themselves, “Gee, my assets are taking a hit, so the government needs to change course.” ‘
Well yes, actually they did. Probably not so much a conspiracy as fellow travelers funded by some very wealthy people.
As for the machinations of: how; when; who, this article raises–I will defer and learn from ms smith and other NCers that are more knowledgeable than myself.
Lastly, what a great reminder(from the commentariat) of the interesting life of Fred Koch– how it must have influenced his children.
thanks so much for twelve years of shining the light
as an aside,
blue bloods marrying each other goes all the way back, before love counted, there was alignment among families and fortunes. The rothschilds , who were originally bankers for the holy roman church, began branching out. the original rothschild had five sons, which then let the family branch out to five banking houses in europe. For two or three generations there after, all the marriges of the sons were to first cousins, so as not to split the family wealth.
all leaders in the past have known of the conspiracies that predated them. That has been standard for thousands of years.. Ahundred years ago, the leaders of our country spoke of the “money powers” who at that time 1799-1899, were british bankers. When the first bank of the united states was abolished in 1811, because the bank was owned/controlled by british banking families, we got the war of 1812. When the second bank of the united states was abolished by andrew jackson in 1836, again because it was still controlled by british banking families, there was the panic of 1837.
These same british banking elites were involved in the funding to split the union in our civil war, luckily abe lincoln used americas ability to create our own money, called “greenbacks” at the time to help preserve the union.
The morgan syndicate, helped establish the current bankers regime in this country, the federal reserve, which has been instrumental in creating the twentieth century and the rise of neoliberalism, in so many forms..Yeah, people have been talking about conspiracies a long time. and back then they really were. now, the groundwork/propaganda is so well entrenched and taught in university, that now people just know how to think.
A hundred years ago, the morgan sydicate consisted of over 200 companies, and accounted for 1/6 of the GDP of the whole of the US. Then throw in the other groups like the rockefeller oil/banking houses, the duponts,mellons,astors,etc… and there was much more concentration of power than there is today. some people were on over a hundred boards of directors, and many were interlocked, between people and stock ownership.
Here’s a story from the 70’s about the well funded effort to turn the country and world right.
In the mid-70’s I was a 16 year-old Connecticutian. As a high achieving student with an eastern-European heritage I opposed the Soviet empire more than the American empire. My politics were still evolving: my views went from libertarian to socialist(though even then I never thought ayn rand had any good ideas). After libertarian conversations with some more conservative acquaintances they eventually invited me to meet with one of their mentors, the grandson(or great grandson? I don’t remember which) of the conservative John Olin, founder of the John M. Olin foundation, one of the key conservative foundations that acted on the Powell memo.
After having informal conversations with the grandson that highlighted my more conservative and anti-Soviet views, and since my scholastic achievement was good enough for entry to the ivy league, he wanted to introduce me to his grandfather with the purpose of having his family’s foundation offer me a full scholarship to an ivy(Dartmouth I believe). After briefly considering the offer I declined since even then I realized I would be beholden to this conservative family and their views for perhaps the rest of my life.
This event clarified my politics and made me realize if anything I was more a socialist than a libertarian. It hit me that if there were conservative foundations recruiting, promoting and advancing conservative thought there must be leftist foundations promoting leftist thought. Alas, when I tried to find any leftist or liberal foundations that might offer scholarships to promote their ideology in a similar manner to the Olin Foundation I could not find one.
Even worse, some of the Democrat/liberal leaders I talked to not only did not back any equivalent leftist foundations offering scholarships for a new generation of leftists but actually told me they would never do something like that because it would be competition against their own children getting into an ivy! The irony. The conservative anti-socialists offering a socialist-type scholarship to promote their views while social liberals promoting a conservative dog-eat-dog world view that did nothing but cannibalize the left.
Thanks for the great post and discussion. If only I’d had the sense to have gone to Evergreen.
The same dichotomy keeps coming up: Mind/Body, Ideal/Material, Ideology/Structure. Instead of mistaking poles of irreducible pairs of opposites for absolutes; choosing sides; and declaring war on our indispensable opponents, maybe see it as it is: a bit of both. I see pairs of irreducible opponents mutually arising from the same ineffable source.
I keep coming back to Nancy Krieger’s article on embodiment, and Chomsky’s account of how Newton exorcised not the ghost, but the machine.
In a world where it is assumed that first there was the Word, and then came the World as a manufactured artifact, is disembodiment really all that suprising? Do we want to think&act on the problem, or talk about the talking about the problem?
That assumption gave rise to a problem: how can Spirit move Matter? It’s an artificial problem arising from a way of thinking. We somehow think our thoughts can divide the indivisible. S&M arise mutually.
What voice do we adopt, when speaking scientifically? The disembodied voice of reason, right? That curtain has been drawn back to reveal ordinary, organic humans embodying seamless fields, not atomic individuals in vacuums.
Thanks to Newton and quantum physics, we now know ourselves to be fields, oddly imagining irreducible pairs of opposites, arising mutually, to be “poles apart,” with absolute nothingness in between. There are no grounds for such bifurcatious oversimplifications.
Say what? There is no MBP because no *body, not no *mind; that is, no matter, material, purely per se: unformed, raw “stuffing” of which ideals are latterly *made.
So I conclude, Neoliberalism doesn’t exist apart from human embodiment of it. I’m interested in questions such as, Why they gotta be like that? What *ideas are there concerning what we can *do about it, without indulging in monkey business like war and propaganda?
While some of the comments on this thread have been excellent, others strike me as missing the point I’m trying to make, so let me be as direct as possible. The position I’m arguing *against* is that the world of ideas is autonomous. According to that view, today’s ideas are explained by yesterday’s ideas. It’s a marketplace of ideas out there and some are expressed more persuasively or just loudly, and then those become the winners, the ideas the majority of people come to accept. If the ideas we bundle into “neoliberalism” are dominant today, an explanation must be based on the history of their promulgators and devotees: the Colloq Lippmann, The Mont Pélérin Society, Public Choice theory, the Powell Memorandum, etc. It can also include the history of the adoption of the ideas by Thatcher, Reagan et al.
I’m not so crazy as to think those things don’t matter, but I think something else matters a whole lot more.
For me, the key move is to make a distinction between the logic, justification for, and internal coherence or geneology of ideas on the one hand, and the propensity of people to believe them on the other. In the first realm ideas are understood in relation to other ideas. The second sees belief in ideas as a form of behavior or habit, much like the clothing we wear, the modes of transportation we use, stuff like that. The question of why people believe something today when they used to believe something else yesterday has a lot in common with questions like why wool became a less (or recently more) popular clothing material or why cars got bigger or smaller, or why people bought more or fewer of them. The premise is that how people live, what technologies are available to them, what laws govern them, and what distribution of economic and political power they live under deeply influence they ideas they are likely to believe. Roughly speaking, this is the perspective of the theory of ideology or the sociology of knowledge.
I had an interesting conversation over breakfast with my partner. We thought about the rise of the view that the human body is essentially a machine to be cared for and “tuned” the way you would some other complex piece of equipment, like a car. We agreed this is a product of the rise of machinery itself in everyday life. It doesn’t mean we really have become machines in the pistons and gears sense, nor does it mean the thought of Newton and Descartes is irrelevant, but simply that the tendency to adopt a particular worldview like mechanism is strongly influenced by how we live and what kinds of problems we have to solve day to day. People involved in environmental education know it’s not enough to get kids (or grownups) to read books about energy or nutrient cycling in ecology; you need direct experience in nature, observing its patterns and changes over time. The first is essential, of course, if you are to understand connectedness in a sophisticated way, but the second can be just as important in dissolving the deep assumptions engendered by a mechanized life that underlie a mechanized perspective.
And so it is with political ideas, only here “experience” refers to the experience of organization, law and power. Consider the trajectory of racism in America. When I was growing up in the 1950s, open expression of racist ideas was commonplace (although I was raised to regard it as immoral). Today racism is less likely to be expressed on its own terms and instead is transmuted into an attraction to social darwinist and similar ideas about winners and losers, makers and takers, etc. How should we explain this? One path is to survey political and cultural purveyors of racism—pundits, politicians, Hollywood screenwriters—and document the emergence of new racialist signifiers. That’s a valuable task, and some people are doing it. But my claim is that this would not tell you very much about *why* such an evolution took place, why openly racist expression became unpopular and coded racism widespread. A better explanation would include the civil rights movement and civil rights laws of the 1960s. The movement enabled anti-racists to see themselves as an organized, powerful group and forced racists to consider that expressing their views could have social consequences. The laws made openly racist behavior illegal in many contexts. Surely “how we live and what rules we live by” is a large, probably decisive, part of any reasonable explanation for why the expression of racism changed so much, so quickly after centuries of almost no change at all.
My piece was an attempt to ask the same question about the rise of neoliberalism. Yes, the history of neoliberal ideas is important, but deep changes in the proclivity of people to believe in them can’t be explained from that history alone. The hypothesis ought to be that a change in the political and economic order—the incentives facing elites and their power to act on the basis of them—were the underlying cause. I floated a hypothesis of what that change consisted of. It struck me as plausible but short on detail and empirical examination. I had hoped to spark some interest in it, at least get readers to discuss its pros and cons, and that’s what some commenters did. What’s frustrating are readings that simply assume such an explanation is misguided because today’s political ideas are “obviously” the result of the compelling elements or contradictions in the political ideas of persuasive or influential people yesterday.
To recap the conclusion of the previous point: why I care about this is that a large part of the left (in the US at least) has become preoccupied with the contestation of consciousness rather than the contestation of power. I’d like to change course.
Dissemination of information for short term agendas meets its own inevitable fat tail – ????
I wrote another comment before this one of yours appeared but mine has been taken by Skynet. Perhaps it will surface eventually.
I think I disagree. The underlying cause was the desire of certain capitalists and certain intellectuals to change the political and economic order to be more to their liking. They combined their talents and acted to bring this about. The ideas of Neoliberalism were formulated to justify and enable it. They rationalise the desire, not drive it.
Precisely!
The political and economic order created by the New Deal included a tax structure intended to limit the ability of the rich and powerful to buy the government, and so, job one became doing away with the New Deal and reclaiming the ability to buy the government.
Every other explanation is needless complication and mostly obfuscation.
The divide and conquer tactics employed by TPTB include not only racism and sexism, but also stoking the resentment felt by the small business owners community at the perceived lack of respect that Yves mentions above.
The MOTU nurture, and herd not only the attitudes of the poor, but the middle, and upper classes too, ensuring that every possible resentment and bias is magnified and if possible set alight in order to preclude our realization of solidarity.
What else is there but human nature to take what is there? Why did the kid eat the whole box of cookies? Lack of self restraint? greed? sugar rush?.
It just doesn’t seem that deep. The post 70’s timeframe, saw a society that was reeling from cultural upheaval of the 60’s and the vietnam war. People in society had other things to think about. At the same time “the greatest generation” was still in charge and letting the new boomers, “have a whack” at “it”. In the process, they allowed people to get away with what they could.And they did. Like mice in a new maze, do we need to ask “why” they went a different way. They did. And that way was to work less, stand up for less, and take more compensation while they are doing it. What is the thought?
They pretended the world was different? in some way that mattered. the people believed the hype. And on and on it went. Lack of restraint, less emphasis on classic thought/critical thinking in schools.the “marketing” of the neoliberal agenda was good. those selling .,sold alot of it. there wasn’t enough people looking out for how they were being swindled. There was just keeping up with the jones’ and all that….It really seems kinda pathetic if you ask me.
Everyone should have known they were selling out the planet. A lot of people did. But maybe still number one was the lack of a real fourth estate, who has consistantly let down the people, by being another backdrop of marketing the neoliberal agenda.
There is 1 1/2 cents from nowhere.
I think I’ll stick with the four networks theories of political power structure: ideological, economic, military, and political [https://whorulesamerica.ucsc.edu/theory/four_networks.html]. I believe I can question whether the arguments of this post that “capital ownership has become substantially more fungible” and “[r]egulatory restrictions on capital movements were dismantled or bypassed” and “new technology and business methods allowed for more integrated production across ownership lines” and this resulted in a “capitalist class with more uniform interests” – suffice as explanations for the present Neoliberal regime – without further argument. Each of these ‘arguments’ from the post reduces to effects and impacts of the Neoliberal takeover rather than explanations or causes of that takeover. I do believe power relations affect ideology rather than vice versa – which I believe is the main thrust of this post. However, I believe ideology shapes the expressions of power relations. The consolidations of media, coincident with the consolidations of the Corportocracy equip our power elite with all the mouthpiece they require to convince individuals they are merely capital, personal relationships are merely economic relationships, and the Market provides the epistemological answer to all questions ethical, moral, economic, and political.
It grows past time to move away from our cities to higher ground — ground at higher elevations.
Since antiquity there has never been a dearth of creative class writers to employ or conversely beguile power.
Bit like currant mainstream econnomics talking about savers when it would be more accurate to say bond holders et al…. the unwashed are irrelevant.
Lots of excellent comments here already. I want to try to address the thesis directly.
In the 1970s some big ‘exogenous shocks’ to the economic system, and their knock-on political effects, allowed the Neoliberal movement to proclaim a crisis. Their enemies, Keynesianism and Social Democracy, had failed. Time to let the experts take over. The time was now because now they were ready.
There was a small subset of capitalists funding the Neoliberal movement and they had been doing it since 1947. Their motives were political. The capitalist class went along with it but were not in the vanguard of the revolution.
Academic departments of economics and law were slowly taken over. Dissidents frozen out. Think-tanks were spawned. Journalists and editors vetted. Politicians courted, parties co-opted. Laws were written. Lawyers were trained. Institutions were infiltrated. The Narrative was controlled, the Overton Window constrained and shifted.
Those organisations were already thoroughly suborned in the 1970s. The think-tanks were already everywhere. Latin America in particular had already been captured. Chile was the first open battle. Reagan and the Hayek-thumping Thatcher were the end of the beginning.
” the opposition between structure and agency,” – is a false alternative, of course. Both are causative.
However, maybe it’s my age, but I remain a Marxist on this point: livelihood, material circumstances, have the last word. I think this is undeniable. This approach is called, in anthropology, functionalism, or, by Marxists, materialism. But at the same time, culture (“agency” is a weird word for it) often guides our response to material circumstances, just as harsh reality shapes culture.
In this case for example, the Powell memo was lying ready when the ’70’s recession hit. And to be fair, the New Left had done their share to discredit traditional liberalism, aka the New Deal/ New Society. Or to be fatalistic about it, the pendulum returned.
Correct me if I’m wrong but I though FDR bastardized liberalism [tm] to push the new deal through.
Liberalism—the political wing of Capitalism—had collapsed in 1914–1929. The New Deal was a strong form of Social Democracy: introducing elements of Socialism without abolishing Capitalism.
What we call Neoliberalism is an attempt to return to classical Liberalism, only more so. It is the typical response of the conservative mind to the failure of its ideas—you didn’t do it hard enough!
” the rules and incentives that direct economic life are the product of choice, and therefore consciousness,” – uh, no, those choices are frequently fortuitous or disguised, and sometimes they aren’t choices at all.
I’m not really hostile to this article – I see he immediately arrive at the “coevolution” of structure and culture; I’m basically picking nits.
Look no further than the 1965 Immigration Act. When you conspire to radically change the demographics of a country from ‘relatively middle class’ to ‘lotsa white at the top and a whole lotta brown at the bottom’ of course inequality is going to show up in per capita metrics. White flight didn’t just occur in the cities, but also the capital markets. By the time of the counterculture revolution, there was a stark choice to be had. Either flatten society with a downwardly spiraling habit as the immigration flood gates were opened and communism was ascendent, or create a tiered achievement society in which global labor is consumed as a commodity, consequences be damned. Hence, all the profits went to those who could exploit at the most efficient rate, worldwide.
Believe it or not, this thesis from Mr. Dorman seems to dovetail nicely with the current border wall discussions. Legislative pushback against neoliberal order equals closed borders. This is where the Evergreen State Left meets MAGA in the middle.
I spent decades trying to understand why we went to Vietnam. Why we went against everything in our Declaration of Independence and our Constitution. Why we ignored all the people up in arms about invading another, small “pissant” country (as LBJ called it). LBJ wanted to entice SE Asians to partner with us economically, to let us build dams and hydropower all along the Mekong. (Which China is now doing – and that’s another leitmotif of the last 50 years.) Vietnam said Buzz Off. There was something more than ideology in the air – on both sides. We wanted to control and form the future and maintain power; they wanted us to GTF out and give them their free agency. There’s the term Dorman uses – agency. But we stubbornly refused and suffered a devastating defeat at the hands of the powerless, poverty-ridden third world. So it was a terrifying new reality and a game changer. Which had a lag time of about 10 years of adjustment to a new reality – the dollar was freed from the gold standard; oil was freed from payments in gold; finance was freed from various international restrictions, etc. The war for the world just geared up financially to maintain power by finance in a world of emerging “free-agency.” It was almost a no brainer for a half-baked political-economic theory to emerge that was essentially “What’s yours is mine and what’s mine is mine, OK?” The wonderful thing is that it didn’t really catch on in spite of some very determined people. Yes, we are left with rubble and ruins, just as if we had clubbed each other to death, but we didn’t use the nuclear bomb Westmoreland procured. And now, 50 years hence we are in the process of looking at the future again, with a more realistic attitude. So short version, we survived in spite of ideology because something in our molecular make-up stopped us from being total idiots. It is the thing that makes us practical. Pragmatic. Words follow.
In terms of the dynamic of the hinterlands or the heart of the country, Hamburg in 1946 is not unlike Hamtramck @ present time. One was a bombed out shell of a city and practically demanded to be rebuilt, whereas the other was an intact shell of buildings still standing.
“…trying to understand why we went to Vietnam”
I think you’re right that it’s more than ideology, but it seems like a lot of important decision makers of the time convinced themselves of things like the domino-theory and were very insecure about the threat of communism.
Part of me thinks that a war to test the limits of US military power was going to be necessary at some point, US leadership must have been really confident in it’s abilities after WWII and even the Korean war was a partial win, since we carved out a client state in S. Korea. Unfortunately for the Vietnamese and our soldiers, it just so happened that the time and place was the Vietnam War.
Listening to Ken Burns’ extensive research and documentation of what the thinking was in leadership, it sounds like the top brass knew/learned pretty quickly that the war was unwinnable.
For me, the real disappointment stems from the stubbornness and prideful refusal to accept reality for years and years while people continued to die.
Even more disappointing is that many in positions of power today STILL don’t want to accept those lessons.
or was vietnam just like neoliberalism. A power play, that was advanced by personalities.
The power play was the french losing its possession. The rubber,tin and oil. The us acting at the behest of the elite, who ruled behind the scenes, wanted those concessions. The hoi polloi
were propagandized about the cold war. But the reality was that it was a game, sides were playing, a game of fire. but the fire was out of control, and no one wanted to admit it started as a game, for spoils. from the end of wwII.
Some things were real, like the meaningless loss of life for millions. Like the wasting of billions ,if not trillions of dollars,and all other currencies/denominations. like the waste of decades to a better growth. But what was also real was the opportunity a “cold war” was to make the people fall in line with those same personalities agenda’s. Which allowed them to be absolved of decades of crimes.
just looking at that council on foreign relations crew, they were almost all the movers behind the cold war.their membership were the executive ,legislative,and judicial branches of govt. they were the major media, ownership,personalities,journalists. they were the industrialists,bankers,policy wonks. they were the academics.hundreds of them. all names people will know.
The council on foreign relations was created by the british. who also created the royal institute of international affairs in britian. they also created versions in france, in russia. and they also created the IPR which was the institute of pacific relations. which were 10 nations all around the pacific, and were all communist. Now like the leaders in britian,germany,and russia were cousins in wwI, their relation doesn’t mean there is no competition,or antagonism. And it didn’t stop millions from dying…. but .
What I’m trying to point out about vietnam is that ideology doesn’t really cut it.
Joe mccarthy, the guy who was so “anti-communist” wasn’t really. he was a bastard looking for power. During the korean war, sen. joe mcarthy, from wisconsin got a special provision for his friends the Andreas’ family who owned ADM , a special permit to sell a crucial vegetable based lubricant for airplane motors to be sold to the soviet union . These were to manufacture airplanes used by the russians to kill americans in korea. What ideology is that?
In WWII :ford, standard oil, prescott bush, ITT, IBM,general motors, all did business with the nazi’s supplying war material before and during the war, for the nazi’s, and making laws with the bank of international settlements so they could be paid ,legally. Each and eveyone of those cases is interesting in its own terms, and they were just some of the stories. Again, what ideology?Their ideology was that after the war they spent two decades fighting in court over the patents liquidated by the german industrial giants.Ford even sued the british govt for blowing up one of their factories they built in vichy france for germany during the war,and they won.
You had nixon sabotaging the peace talks in 1968, so that the vietnam war wouldn’t end under a democrat, when there was a chance for peace. Instead the war lasted another 5 years, and @22,000 american lives lost and countless injured later. again what ideology. Then he sent ghw bush to china as an ambassador, and we are all in doing business with a communist dictatorship to this very day… even with google and facebook running censorship for the party… again what ideology? is there besides money. and the power to specific people.
To pretend there is something more than greed,and lust for power at the cause of the things done in the name of ideologies, is naive.IMO.And to pretend their was a rational explanation as to why the rich get richer, isn’t needed.the poor get the picture. Even if it is taught in university, that noble men and women tried their best, but the ideologies were in the way….
I say it is time to get past these fairy tales and move on.
There seems a tabu blocking the actualized & tranformed neomarxism of the German Robert Kurz in nakes capitalism. . Therefore all discussions about neoliberalism (its deregulations of workers rights, make the way free for the Giga-Konzerns & Financialcapital in inner and outer expansion, profit making still of the dying in the Hospizes , privatizations of public commons -for exzessiv profit and so on,, look Slavoj Zizek in : “The Trouble of Paradise”)
But if you analyse all the predicates of neoliberal economical, ideological “totalités” , you don´t find the material base of the genese of this socialdarwinistic-exzess with its social desertifiations of the life for hundreds of millions poor people in the Western World and making a paradise for the milioneers.
It needs to find the economical “energizing factor” and the basic failure of the global capitalism !. In the real production-spheres the profitproduction shrinks . This failure causes u.a. the gigantesque growing of the “Börsen” , the bubbles and their crashes (Brenner) , wherefrom come the big and bigger financial crises . It gives for the poor masses a “secular stagnation”( deep wages and so on. Only for a hard core of rich people growing of profit and wealth (in USA sometimes about 30 percent- to read in AdamT o o z e s “Crashed”).
It are the richest and the right, who organize the neoliberal wealth on their side, their banking-accounts etc.
That means, in the -for me-criminal -Neoliberalism – the richest and powerfullest power groups -together with neofashist political Power- right- take the consequences of
the shrinking of profitproduction in the sphere of real production so:
Autsterity for the Millions,but growing wealth for the Millioneers etc,
That-s the core of Neoliberalism, who has therefore some similarity with the old brutal ruleless “Manchester Capitalism” in the times of Dickens and General Ludd.
But the big problem is for this harder economical follower of the Manchester Capitalism is the “surplusvalue-shrinking” -” Mehrwertmassenschrumpfung” , in the real capitalistic production which the big German, neomarxian , Marx-Transformator and Actualizer Robert K u r z detected.-
That means, globally shrinks the lot of direct producers of “relative surplus value” because the growing of the the machinery (microchip revolution, roboter-machine, digitalisation etc- which called Marx Constant , sometimes fixed,capital) reduces necessary the number of direct producers of “surplusvalue”- And so in the long run the masses of globally produced surplusvalue. At the end -where no surplusvalue, there does-nt exist capitalism…no more!
That means socialdarwinstic amoral neoliberalcapitalism is abolishing itself – nolens volens..
Therefore the big problem for humanity is not to break the head about the ugly “Verfallsform” des necessary dying neoliberalcapitalism. but to work together for it disappearing very soon, before giga-economical collapses, brutal-nuclear- wars, ecological desaster let us desappear – in a final “homicid”(Günter Andes, who spoke with the pilots of Hiroshima-Desertification by USA)
My conviction is , that earlier than later