Neoliberalism: Oversold? (2016)
imf.org
imf.org
-Neoliberalism views competitiveness as an inherit trait, everyone must be competitive! Competition is good and produces better outcomes for all! But private actively entities strive to monopolize and reduce competition
- so incentives for competition must be continuously increased using political means
- Everyone wants to be wealthy, but we have to keep the tax and regulatory burden low so we don't discourage anyone from striving for wealth, to the point of shaving base points off of niche taxes
Basically, Neoliberalism doesn't seem to be societies natural order. It's an ideology imposed on us that, ironically, doesn't offer you any direct benefit if you adopt it. If I crush my competitors, I'm better off. If just accept tax and regulations as the cost of doing business, and don't allow it to discourage me, I stand to make more money than the "scaredy-cats" sitting on their thumbs, waiting for deregulation to happen (and also better positioned when the barriers are lifted).
It feels like Neoliberalism's primary benefactors are those who reject it.
That's probably right. The human instinct is tribal and quite suspicious of outsiders, so oppressive conservative totalitarianism is probably the "natural order" for humans, and this explains why we've had to endure so many different instances of it, both left and right, while liberalism (both social and economic), regardless of mind-boggling amounts of evidence in its favour, remains suspicious in very large circles. It feels wrong. Homosexuality? That's against the natural order. Competition? That's against the natural order.
> It's an ideology imposed on us that, ironically, doesn't offer you any direct benefit if you adopt it.
No, the irony is that it does indeed bring direct huge benefits, and you can see the benefits in macro numbers almost instantly. Look at China under Deng Xiaoping. Eastern Europe is night and day between the countries that implemented liberalism after the fall of the Soviet Union, and those that didn't. Pinochet implemented liberal economic policies in Chile, and despite being a horrible totalitarian despot, Chile surged ahead almost immediately, and is still today significantly richer than South American peers with more "natural" policies.
(yes, I know, it's a "manufacturered shortage" and also big bad USA)
That's far from being even remotely true. The whole point of a liberalized economy is to enable anyone that wants to compete to be able to compete. The state should have no right to stop anyone from competing with any established company and much less so with state-sponsored goods and services.
Whoever wants to do their own thing should simply do their own thing. Anyone who prefers to be an employee and get theirs at the end of the month should also be able to do that, and it's fine too. That's it.
> so incentives for competition must be continuously increased using political means
No, again that's far from being remotely true. The point of competition is that it fosters innovation and is a source of progress. Yet, this only makes sense if the driving force is free will, and any investment is done voluntarily.
If however anyone prefers to simply found a commune and live off communal work then that's fine too. In fact, capitalist free market economies do foster the world's most successful cooperative organizations, such as for example the Mondragon cooperative in Spain.
https://en.wikipedia.org/wiki/Mondragon_Corporation
The key factor is free will, and the freedom for anyone to do what they feel like doing.
> Everyone wants to be wealthy,
No, that's not right at all. The point of a liberal economy is that anyone should be free to engage in any economic activity without being sabotaged or hindered by any form of government or state institution. Money is not nor it ever was the driving force behind free market economy. Free enterprise is a synonym of capitalism for a very good reason. Different strokes for different folks, and some folks are happy to just get enough income to live while pursuing an activity that pleases them, even if it is far from being a cash cow or even profitable.
In a nutshell, your arguments are the main problem behind these rabid anti-capitalism nutjobs: they actually don't criticize capitalism, and instead they resort to a massive series of strawmen attacks on imaginary positions that they invented themselves, which have no relation with reality.
Just like colonialism or slavery, neoliberalism wasn't meant to benefit ordinary people. Just the elite.
That's a narrow view. It comes down to conflict versus cooperation. Both exist in nature and both are beneficial. The trick is in maintaining a balance -- homeostasis -- between the two that promotes healthy growth at large and not just for one group or individual.
https://www.theguardian.com/news/2017/aug/18/neoliberalism-t...
I know very little about economics, but this makes a lot of sense to me. Industries playing "zero sum games" (i.e. investment banking) _can't_ result in overall growth because there must be a loser for every winner, but sharing true value-creating technology will raise the GDP for everyone.
Actually, that's not even remotely true. Just because a seller sells high it doesn't mean that the ones doing the buying are being left out to dry. Investors seeking long-term profits or cashing in dividends may be willing to buy without many concerns regarding current short-term market trends, and investors seeking short-term profits may be cashing out their shares to generate liquidity to invest somewhere else.
In the US,the Dow Jones industrial average is essentially showing constant growth for over a century, and this would not be possible if an economy was a zero-sum game. Economies do grow, and transactions can in fact be beneficial to all parties involved.
I am pleased that the IMF has arrived to this conclusion. To me it always seemed obvious but I met a lot of economics fanatics who think that they have it all figured out in a handful of simple rules that must be adhered to religiously. I never understood those people.
"neoliberal" is actually an entirely political philosophy which specifically dictates what the role of a government and state should be in a capitalist economy.
Without the neoliberal diktats, it's just plain old capitalism.
Austerity in the public sector is an expression of neoliberal priority of reduced public regulatory and tax burden as the means to achieve economic growth, which produced a preference to relieve fiscal imbalance with spending rather than revenue-side measures.
No, its not.
There is both descriptive economic theory and prescriptive economic theory. Only the latter meets your description.
Now, it's true that the latter is often accompanied by nonscientific descriptive dogma, but that no more precludes scientific descriptive economics than the existence of nonscientific dogma about the origin of the universe makes it impossible for scientific cosmology to exist.
I find it hard to imagine a "descriptive economic theory" without relatively unshakably agreed upon definitions of these terms.
Practically all the countries that are under "austerity" (few of the policies actually implemented in these countries fit the dictionary definition of "austerity", except perhaps Greece) were following supposedly Keynesian policies of spending in downturns, except they forgot the bit about consolidating in upturns. The 00's were a huge upturn, yet most of the countries now under austerity were spending freely. Then the crash hit, and they had to spend even more, and then came a downturn and suddenly spending was actually problematic.
But yeah, economic liberals are the bad guys, and they were also the bad guys 10-15 years ago when they warned that governments should step back, consolidate and prepare for a rainy day.
The U.N is a great example of failed neoliberalism – by and large it’s not a highly effective organization, but it does provide a venue for effective actors to collaborate. It’s apparent that the U.N could be more cost-effective. I’m sure there are a million counter examples but most of the functional value of the U.N could be replaced by slack. Before you show me the million counter examples, just consider, “if the U.N were using its budget effectively, wouldn’t there be more examples of the good work they do?”.
The Marshall plan is a great example of successful neoliberalism. Say what you will about authoritarian systems but they get one thing right about recessions / depressions: it’s a waste to have so many good workers sit idle. The Marshall plan made it possible to hire Europeans to rebuild their country. The heavily indebted, war torn nations couldn’t afford to do that themselves (at least under capitalism – which is why it was critical to execute the plan so that people didn’t have to revert to more communist / centrally planned regimes) and it’s probably better to get folks back to work rebuilding their nation than letting them stew about and wonder what a glorious revolution would look like.
You can call austerity thinkers whatever you want, but the doctrine seems to be correlated with multi-national corporatist favoritism and a fetishized view of free markets. Regardless of their intentions, the people called ‘neoliberals’ have created a system where massive gains are privatized, the rule of law is pervasive but the application of law has an impact bias, and losses are socialized except when they aren’t in which case they seek the pound of flesh from people who can’t say no rather than people who should have had skin in the game. At best, this is ‘business as usual’ (at least for the status quo that’s seen the world massively destabilized), at worst this is the worst type of welfare / theft – coerced wealth transfer from working stiffs to people who have entrenched interests.
We can compare and contrast two relatively similar approaches. You know who rebuilt Japan after the war? Japanese folks did. You know who rebuilt South Korea after the Korean war? The Koreans. You know who rebuilt Iraq? Politically connected Americans.
Maybe the Americans were more cost-effective, but I doubt it. And even if so, maybe it’s better if we keep the surplus value in the country. It seems like people tend to value stability higher as they get wealthier. I imagine ISIS would have had a harder time changing things up in Iraq if people were happier with the status quo – better institutions, more opportunity, and surplus value (profit) is key to making investments. The guy who started Hyundai got his seed money from repairing jeeps for the U.S Army during the Korean war. Now, his company employs 65k South Koreans. Entrepreneurs need a way to get to their first success, and good neoliberals seem to value that and bad neoliberals seem to have a bias towards “we’ll only consider the people who are already entrepreneurs”.
But South Korea became a first world nation and Iraq became the birthplace of ISIS. You know who bears the worst consequences of ISIS? It’s not the Americans who got money to rebuild Iraq – although they may get some more business.
Tl;dr and conclusion - All politics is tribal, and the fundamental political question is that of “who is my friend, and who is my foe?”. Scarcity seems to make people draw tighter lines around their tribe and see less in common with their foe and that’s really bad for diverse democracies. Neoliberals seem to pay lip service to acknowledging problems but their solutions don’t seem to address the underlying problems so long as someone is making money off the problem.
A neoliberal strawman might agree “rents are too high” but it’ll say “let’s just sell public housing to developers and cut rent assistance – it’ll work itself out”. But they won’t do things like strike down zoning laws and invest in transportation to reduce the cost (in time / money) of getting around.
> The U.N is a great example of failed neoliberalism
The UN is not an example of neoliberalism, being both prior to it's emergence and not primarily motivated by economic policy concerns.
> The Marshall plan is a great example of successful neoliberalism.
No, it's not. Again, it predates neoliberalism. And, also, as economic policy goes, it's not really neoliberal (in fact, some of the criticism of it a the time prefigures modern neoliberal ideology.)
To the extent that people identify centerist DNC politicians with neoliberalism, I'll say "that's what neoliberalism is".