More on Markets and Neoliberalism from Crooked Timber
Actual markets in the American economy are extremely rare and unusual beasts. An economics of markets ought to be regarded as generally useful as a biology of cephalopods, amid the living world of bones and shells. But, somehow the idealized, metaphoric market is substituted as an analytic mask, laid across a vast variety of economic relations and relationships, obscuring every important feature of what actually is. And, then we wonder why the “thinking” and policy debates that result are stupid and corrupt.
— Bruce Wilder
Emphasis added. This is in the context of a critique of neoloberalism, here described by Henry Farrell:
In fact, it is not free markets with vigorous competition among producers, but instead, a mixture of big firm oligopoly and cosy and frequently corrupt relationships between state officials, who have been told to subcontract out parts of government, and the businesses which supply these new services, in what is at best a murky approximation to a real marketplace. You can read this as a statement that classical liberalism has some good points as well as some bad ones. You can equally well read it as saying (and this is the more fundamental point), that regardless of whether or not classical realism had some good arguments, these don’t have anything much to do with actually-existing-neoliberalism which is a crony capitalist fantasy.
This lays bare the greed, dishonesty, corruption and manipulation inherent to neoliberalism, and simultaneously exposes the concept of “the market” as an absurd quirk of the typical economist’s imagination.
Each of these meaty comments is highly worthy of recognition. The cephalopod reference made the first one utterly irresistible, and prompted this post.
The bad news is that there doesn’t seem to be any way out.
Here, John Quiggin provides a good functional definition of neolibealism – the first I’ve ever seen – and a very thoughtful critique of neoliberalism as a political cum economic ideology.
The core of the neoliberal program is
(i) to remove the state altogether from ‘non-core’ functions such as the provision of infrastructure services
(ii) to minimise the state role in core functions (health, education, income security) through contracting out, voucher schemes and so on
(iii) to reject redistribution of income except insofar as it is implied by the provision of a basic ‘safety net’.
Quiggin judges neoliberaism to be a failure, for different reasons in different places. I’m going to quibble with his definition of failure, type iii, though: a failure to deliver the promised outcomes. With a focus in the inherent dishonesty and corruption inherent to neoliberalism, I can only view it as highly successful in the U.S. This is because there is a real hidden agenda lurking behind the false public agenda.
Wilder describes how it works in a follow-up comment: (Be sure to read the whole thing.)
Neoliberalism, it seems to me, uses the myth of the market, to rationalize rule-making, which serves the rentiers (is dynamically inefficient) and which promotes authoritarian, and therefore unfair, resolution of conflict.
Quiggin describes the type iii failure in the U.S: “The basic problem is that, given high levels of inequality, very strong economic performance is required to match the levels of economic security and social services delivered under social democracy even with mediocre growth outcomes.” Of course, no such strong economic performance is forthcoming.
However, the real agenda is not general economic security. Quite to the contrary, it is to maximize and maintain a high level of inequality, such that the small, elite minority has absolute control over the impoverished majority, precisely because their economic security is severely limited. I cite as evidence the extreme form of 21st Century Republican party neoliberalism, which even attacks the existence of a basic safety net. Note also their ongoing attacks against labor unions, health care reform, and education at all levels.
The job is not yet complete, but I have to view the record of neoliberalism in the U.S., to date, as a smashing success.
I posted this on my blog in slightly different form as a Quote of the Day entry. But it makes such a fitting companion piece to Dan’s from earlier today that I decided to put it up here, as well.
H/T to Unlearningecon
OK, I’ll bite. If that is neo-liberalism, what is liberalism? 😉
Note John Quiggin not Quiggan
I take neoliberalism to be the economic/domestic policy side of what neoconservatism is to foreign policy.
The vocabulary gets confusing. Do mean Jeffersonian liberalism, classical liberalism, the liberalism exemplified by the Democratic party in the 60’s, Rush Limbaugh’s “the L word?”
That”s why I try not to even use the word liberal. I consider myself to be a progressive.
What that means to me, in general, is –
Regulated capitalism.
Strongly regulated finance sector, as I’ve talked about recently.
Government intervention via fiscal policy when the economy falters, most especially at the ZIRB.
Steeply progressive tax structure as part of an explicit redistribution of income.
Robust safety nets.
Having the government, rather than contracted private industry, handle core functions.
I have been driven to these positions be seeing what has happened in this country over the last 35 years, or so.
Other views may differ, but I’d be pretty surprised if others who consider themselves to be progressives disagreed with me very much.
I also think ‘conservative” has become a vague, meaningless term. I call those whose views are 180 degrees from mine “regressives.”
Cheers!
JzB
rdb –
Fixed. Thanx.
JzB
I think the other confusion with the term neoliberal is that the world called what we call neoconservative…neoliberal.
Ennh. There are so many abstractions in here it’s like a puff of smoke. Maybe you like the smell but there’s too little substance.
Everything being said about “markets’ could find an analogue in “democracy”. Just as we don’t have a galazy of efficient markets, we don’t live in perfect democracy where every public decision is submitted to the electorate. We have a bastardized version of the Venetian Republic where the people selected in one elections meet the people selected in another and they elect more people who go off into bureaucracies and occasionally hold meetings amongst themselves and come out with some sausage. Yet as endless as the right’s argument for markets is the left’s effort to justify big non-democratic government with rhetoric about democracy. It’s all just a rationalization of one’s preferences.
And for every observation about markets becoming oligopolies we can find evidence of progressive regulation analogously hamstringing markets, from Progressive era utility regulation to New Deal imposition of rigidities on labor markets, to the Great Society’s Medicaid and Medicare regulation of health care markets to Clinton’s progressive housing subsidies, So these arguments are just matters of finding new ways to restate the postulates shared among like thinkers.
Mark T –
That all sounds so quasi-objectively pseudo-neutral. As is always the case with false equivalence.
You are missing Wilder’s bigger point, that the economy is in fact NOT a market-based series of operations. It is a rule based series of operations. So, to your assertion that progressive regulation “hamstrings” markets, I say, “So what!”
The corollary is that the rules are always going to favor somebody. I say lets have the rules favor those who otherwise might be disadvantaged by the process; those who are on the short sides of the information, wealth and power asymmetries.
Neoliberalism does just the opposite, favoring the wealthy elite and the entrenched power structure that supports them. And all of that in a dishonest, corrupt and manipulative manner.
If that all seems abstract and substance-free to you, then thank you for playing, and have a nice day. Be sure to welcome our new corporate overlords for me.
JzB
Hey JzB, check out this:
http://www.truth-out.org/benign-lucifer-privatization-water/1329057581
Oops, credit where credit is due: Got the link off of Naked Capitalism.