Saturday, October 01, 2005

Neoliberalism at bay

Neoliberalism is a generic term in widespread use outside the United States. It designates a set of socioeconomic policies that seek to diminish, or at least limit the growth of government in favor of free-market solutions. The aim is to reduce regulation and taxes, increase privatization, and promote free enterprise as an unfettered engine of economic advance. As the general level of prosperity rises--so advocates argue--even the poor will be better off.

In the US the term fosters some confusion, as liberalism is still associated with big government, honoring the examples of the New Deal and the Great Society. Neoliberals view such policies as wrong-headed.

There is a significant overlap with the American movement known as Libertarianism. However, Libertarianism is not limited to economics, but undertakes a broader advocacy of freedom, including sexual expression and the use of mind-altering substances. On these matters, Neoliberalism is (as far as I can tell) silent. Still, in so far as Libertarians advocate deregulation, lower taxes, and so forth, their views will be implicated in the following critique.

The poster woman, so to speak, of Neoliberalism is Britain’s Margaret Thatcher. When she became Prime Minister in 1979, Britain had fallen behind its chief competitors on the Continent. Arguably this resulted from three decades of socialist policies. After the Thatcher reforms, Britain surged ahead. Significantly, Tony Blair’s government has retained most of the Thatcher reforms, showing that even left-wing governments can adhere to Neoliberalism when they choose.

After the fall of the Soviet bloc some fifteen years ago, Neoliberalism was implemented in several eastern European countries. These changes can cause considerable pain because there are losers as well as winners. Hence the expression "shock therapy." Efforts to apply the concept in the Third World have been less successful, allegedly because these have been incomplete.

In assessing the international dimension of Neoliberalism, one must note that, in seeming contradiction to the laissez-faire principle, these have been imposed, rather than chosen, usually by powerful institutions such as the International Monetary Fund. The ruling concepts are sometimes ascribed to a body of thinking known as the Washington Consensus. One of the flaws of this approach is the cookie-cutter principle. The international elite seeks to impose the same solution on all sorts of countries, ignoring their history and culture.

On the Left Neoliberalism has elicited much criticism, sometimes reasoned, sometimes scornful and alarmist. The rise of Neoliberalism in the 1970s upset the teleological certainty that the left had long entertained, of a gradual march towards total social ownership of the means of production. As Isaiah Berlin and Karl Popper refuted historical inevitability a long time ago, we need not shed a tear over the shredding of this article of faith.

More substantively, it has been pointed out that Neoliberalism, is heartless, leaving the most vulnerable in society to their fates. In this way it serves to unravel the social fabric.

For some there is simply a dislike of business culture, of making money, and of what is perceived as an excessively materialistic set of values. Sometimes this emphasis is regarded as characteristic of the English-speaking world. Hence the apparent rejection by voters in France and Germany of the "Anglo-Saxon model."

To my mind the most important defect of Neoliberalism is its neglect of culture and history. The People’s Republic of China, which combines state intervention with hypercapitalism, is growing at the rate of 8% a year. South Korea, Taiwan, and Singapore are also doing very well, and Vietnam is joining them. Argentina, a prime target of Neoliberal intervention, is not doing well. Rigidly economistic, Neoliberalism rides roughshod over cultural distinctiveness.

As Alexis de Tocqueville observed long ago, it is not so much the form of government that matters, as the way that each people in accord with its particular bent and gifts uses it. Economic advance then would seem to require in many cases not simply the imposition of a new set of economic policies, but a concerted effort to change the culture. Such attempts would now bump up against the tenets of multiculturalism, which allege that all cultures are of equal dignity.

Sometimes privatization works, and sometimes it doesn’t. In other cases a mixed approach offers the best solution. Living in upper Manhattan, I have had the opportunity to observe the economic revival of Harlem. To a significant extent this is due to private investment, from Magic Johnson’s creation of a mall on 125th Street to the many brownstones that have been rehabbed by upper middle-class couples. However, the role of astute politicians, who have been honing their skills over the decades has been crucial in directing public resources to the effort. The revival of Harlem would not have been possible without the general improvement in New York City. Across the East River, though, Bedford-Stuyvesant has not been doing so well. Evidently, culture operates on a micro-level, producing differences even within cities and within ethnic groups.

It is clear, at all events, that privatization fundamentalism is not the answer.

More broadly, recent events in the United States have highlighted the limitations of Neoliberalism and its half-sister Libertarianism. The administration of George Bush has departed from Neoliberal ideas, especially in it profligate spending. To the extent that it has applied Neoliberal ideas, the current Republican regime in Washington has not done very well. Tax cuts have served mainly to further the prosperity of the rich and the superrich. The gap between rich and poor in the United States is now huge; we have entered a new Gilded Age. Intervening in Iraq was certainly not called for by Neoliberal principles and the huge waste of money there is making it harder to accomplish other things.

Not surprisingly, Katrina evoked some more-of-the-same “solutions” from the Neoliberal camp. The Heritage Foundation had a symposium which showcased thirty-two proposals—a few good, most bad, and the whole totally inadequate. The New York Times columnist John Tierney proposed that Wal-Mart take over FEMA’s duties in disaster relief.

None of this stuff, at least overtly, came from the president. Bush, taking a leaf from LBJ, promises a $200 billion reconstruction program. When it comes to the economy this government cannot "stay the course."

The appalling television images from New Orleans revealed something else that has long been evident to those who would but look. We now have two nations, one mainly white and prosperous, the other black and brown and poor. We must now act decisively to repair this huge gap in the social fabric. Alas, as far as I can see, at this juncture neither Neoliberalism nor Libertarianism can offer anything useful.

To be sure, it is much easier to erode the fabric of social solidarity than to reconstruct it. We can no longer be complacent; Katrina has shattered the easy option of looking the other way at our most challenging social problem. If we are to remain a single nation, that task of social reconstruction is the most urgent task awaiting us today.


Blogger Marcus McGregor said...

In light of recent scientific findings concerning melting of the arctic ice cap, would you consider revising your previous post that cast the dangers of anthropogenic contributions to global warming as a hoax?

3:02 AM  

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